Three New Year Resolutions Business Owners Should Keep
As the New Year begins, many entrepreneurs are thinking about what their business can do better in 2015. While each individual business has different improvements they are able to make, here are three universally applicable “New Year’s Resolutions” every business owner should make a point to keep:
Audit, then improve your technology
Technology isn’t just a collection of equipment — it’s a key component of your business process. Even though we interact with it daily, many entrepreneurs don’t realize the level at which technology is unused, underutilized or used incorrectly within your organization. Start by taking an audit of where technology is used in your business, and what purpose or function it serves. Once you have identified the value it produces (or lack thereof), you can begin to plan for improvements that target increases in ability, efficiency and profitability. Don’t be afraid to consult with a professional if you’re not comfortable assessing tech on your own — often, an outside set of technical eyes can see possible improvements that would otherwise be missed.
Understand your financial statements
Every business owner has some degree of familiarity with their financial statements – but do you understand what they tell you about your business? Many business owners don’t realize that the information in your financial statements goes far beyond profit and loss. Accurate financial statements provide critical insight into what kinds of income and expenses compose your cash flows, and can help identify areas where money is wasted or potential revenue is lost. They can also provide marketing guidance by providing you with information about your most popular and profitable products. Ready to learn more? Begin by reviewing your previous year statements with an accountant, bookkeeper or another financial professional. As the business owner, you should also plan to take a class that guides you through the details of the most common business financial statements.
Project your cash flows
Along with understanding your financial statements, it’s also important to actively think about how money will go in and out of your business in the future. A cash flow projection is a great place to start, as it will provide you with estimated income and expenses over the course of the next year. Begin by using past financial data to illustrate a “baseline” for your projection, and then begin to consider how any changes you make will affect that data. Are you increasing your marketing? Buying new equipment? Rolling out new products? Consider how all of these things will either increase or decrease sales and expenses in each month, and change your projections accordingly. The goal is to create a tool that will help you see trends in your revenue, control high expenses and plan for investments throughout the next year.
It’s true that each business is unique, but the principles illustrated in these resolutions are universal. By using these three resolutions as a starting place for improving your business in this New Year, you are taking great steps towards increasing the profitability, efficiency and overall success of your business for many years to come.
You can also view this post in the Rio Rancho Observer