Whether you’re new to business or a seasoned entrepreneur, setting goals for you and your business at the beginning of the year can give your team direction and a sense of purpose that they can use to motivate them throughout the year. Improving customer engagement, increasing sales, or fine-tuning operational systems are all worthwhile goals and will have a positive impact on your company; however, a number of other financially oriented goals can have a similar effect.
According to the experts at Kiplinger Advisor Collective, implementing one or more of the following seven goals can keep your business running at its best and ready for any obstacles it may face. Whether you set these goals at the start of the new year or a few months later, your business can benefit from better financial preparation.
Prepare for total financial disasters
“Having built and run several businesses, I am always amazed at how often business owners are unprepared for the financial disasters that are so common. To address this, I recommend businesses implement “Financial Fire Drills,” a concept we’ve standardized for our individual clients so they have a plan for the eventualities. Having a thoughtful plan for events—including the financial impact of losing a key customer, death or disability of a key stakeholder, extreme change in regulation, or other shock—isn’t something you want to think about when it happens. Routinely conducting these exercises would go a long way in identifying risk and creating financial stability for investors.” — H. Adam Holt, Active-Map
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Implement a strong cash flow management system
“One of the financial strategies that businesses should implement is a strong cash flow management system. It is very important to understand how the revenue comes in and out of the business. You can learn how a business is growing or stagnating, and what products or services are working or need to be redesigned or marketed differently. It can also help with cost-cutting measures, as many of us experience business creep similar to lifestyle creep—where we add to systems and costs that don’t add value and can rob us of profits.” — Jason Wittug, Froogal
Connect with a tax advisor
“I think more businesses should coordinate with their tax advisor and proactively address tax planning, which may include implementing a retirement plan or changing an existing one. Having a retirement plan can not only help a business owner build wealth outside of the business, but it can also help them save on taxes and retain employees. — Margherita Cheng, Blue Ocean Global Wealth
The Kiplinger Advisor Collective is a benchmark-based professional organization for personal financial advisors, managers and executives. More information >
Hire freelancers to support your weak points
“Identify the weak points of your business. Then, hire independent contractors who specialize in those areas of weakness. Contractors should fill in the gaps until the weakness is eliminated.” — Shawn Plummer, Annuity Expert
Take advantage of executive bonus plans and buy-sell agreements
“Businesses often leave themselves vulnerable to the prospect of talent and unexpected transfers. Businesses may consider using permanent life insurance in the form of executive compensation plans to retain key talent, or buy-sell agreements to help transition the business efficiently in the event of an unexpected partner departure. A drain on talent and unwanted partners lead to less desirable results.” — Dr. Preston D. Cherry, Parallel Financial Planning
Create an emergency fund
“I think the main financial strategy that businesses should consider for this year, if your business hasn’t already done so, is implementing an emergency fund. This will help your business sustain itself in any situation and will at least give your business a financial cushion to carry out important projects, while maintaining employee retention and business relationships.” — Justin Donald, A lifestyle investor
Review (and potentially restructure) your debt and pricing strategies.
“As small businesses head into the rest of the year, I believe they should consider undertaking a comprehensive review and potential restructuring of their debt and pricing strategies in light of interest rate volatility. Small business owners should look at their options for hedging against these fluctuations, which can affect various aspects of their operations and financial well-being.” — Ramona Ortega, My Money My Future
The information presented here is not investment, tax or financial advice. You should consult a licensed professional for advice on your specific situation.