1. Stay on top of your bookkeeping. Many small business owners push their bookkeeping to the back burner and then scramble at the end of the year to get taxes in line. It’s much more beneficial to the growth of your company to always know where you are financially. As the saying goes, how can you get to where you are going if you don’t know where you are. Following a bookkeeping process that works for you for handling accounts receivable, accounts payable, asset/liability reviews, and bank account reconciliation will allow you to calculate up-to-date and accurate financial reports each quarter. These important reports will allow you to set growth goals that are rooted in actuaries. We highly recommend using Quickbooks for your small business bookkeeping needs. And remember, there are lots of people who do bookkeeping, but not all do it well. Be diligent in finding a reputable bookkeeper.
2. Use financial reports to make knowledgable financial forecasts. Financial forecasting is a great tool in determining business growth. You don’t have to take big risks with your business if you have a clear financial plan and a forecast to predict whether certain financial moves are wise. The keys to financial planning are having accurate books and a trusted accountant who will work with you to understand your goals. Your accountant can help you make forecast decisions based upon the financial reports and your business goals such as
- Cash Flow
- Revenue vs. Expenses
- Profit and Loss
- Disaster Planning
- Hiring & Downsizing
- Opening New Locations
3. Pay attention to cash flow. Cash flow is vital to business growth. Monitor your inventory levels to be sure you’re not tying up cash with inventory sitting on shelves. Watch your receivables; every dollar that is in receivables is a dollar that’s being held up. Just remember that receivables is not the same as cash.
In that vein, also remember that profit is the not same as cash. You can’t pay bills, buy inventory or grow with profits alone.
That being said, growth itself can negatively effect cash flow. This article is about growth so obviously growing your business is good, but it’s a matter of working capital. Growth takes cash and the faster you grow, the more financing you need.
4. Set SMART goals. Once you’ve worked with your accountant to understand your financial situation, each goal you set should be specific, measurable, achievable, relevant, and time limited (SMART).
Specific – think about exactly what the goal is. Also consider why this goal is important and who needs to be involved within your organization.
Measurable – a goal is more tangible when you have a way to measure its progress. What metrics are you going to use to determine if the goal has been met?
Achievable – focus on how you will accomplish the goal and if you have the necessary tools and skills; if not, consider what it would take to attain them.
Relevant – does the goal make sense with the larger business goals? Make sure the goal is in alignment with the broader business objectives.
Time Limited – any goal is is better accomplished when there is a deadline. Define a target date for the goal to be met and stick to it. This will also help you in determining if you are moving in the right direction since half-way through the time period you can see where you are and then make appropriate adjustments to reach the goal by the deadline.
5. Market. Get feedback from your existing customers. You can discover ways to grow by finding out what products or services your customers really want. By offering product and service solutions to their problems you can tap into a new market segment for your business.
Look for new customers as well. A proper market analysis can help you identify new customers based on where they live, work and hang out on social media. You can start by finding people who are similar to your existing customers. New customers and new products/services equals growth.
Start off the year with these tips and make 2020 a year of growth for your small business!