Every business needs sound financial planning and oversight in order to thrive and, with the new tax year just around the corner, now is the perfect time to start thinking about the ways in which you could improve your business finances in 2023.
Read on to learn some of our top tips for making sure your business finances are healthy and sustainable.
Develop a financial plan for the year ahead
The best way to ensure that your business is financially secure is by developing a detailed financial plan for the coming year, and perhaps a less detailed one for the following two years depending on the nature of your business.
This plan should include projected revenue and expenses, as well as goals for sales, profits, cash flow, investments, debt reduction, and other key areas of your business.
Setting out these targets should help to keep you motivated and focused, by giving you a clear roadmap to refer back to throughout the year.
It will also help you to identify any likely challenges, so that contingencies can be made or, if necessary, additional funding sourced or cut-backs made. Similarly, it could shed light on opportunities for growth, the need for pivoting your offering or to recruit new skills.
Whilst this should be focused on business performance, as a business owner your own personal financial goals should also be kept in mind.
Analyse your cash flow regularly
It’s essential that you monitor your cash flow closely throughout the year. Doing so will help you to identify any minor issues before they evolve into major problems.
This is even more important during recessionary times, and if your business is experiencing growth or adapting to new markets.
Whether you’re using cloud accounting software, or still reliant on spreadsheets, both tools can help you to track incoming and outgoing funds, and to identify any patterns or trends that emerge.
If there are any discrepancies between expected income/expenses and actual figures, it would be prudent to investigate why this is happening so that it doesn’t inadvertently become a recurring issue.
Review your finances before making big decisions
Before making any big decisions about investment, or expanding your business, it’s important that you review your current financial position carefully.
This will give you an accurate picture of where your business stands financially, so that you can make informed decisions about how best to proceed, without risking overextending yourself or taking on too much debt.
Having good quality management information will also help you analyse previous patterns.
It is good practice to run through “what if” scenarios when making big decisions – for example, hiring new staff or buying expensive equipment.
Having contingency plans in place, should something unexpected occur, will help you to protect yourself against possible losses down the line.
Give yourself room for growth in 2023
Taking control of your small business’s finances requires careful planning and regular review – but it’s worth it for the gains to be made.
Having a plan and keeping abreast of your numbers can be key to keeping your business running smoothly, and to giving you room for growth. It can also make the time you spend with your accountant more productive.
If you want to discuss your objectives, or plans for growth, for 2023 with one of our advisers in Cambridgeshire, Bedfordshire or Hertfordshire, and to find out more about how we can equip you with the tools you need to succeed in the 12 months ahead, contact us today.