No matter how successful last year was, your business will benefit from a financial detox to commence 2017 more positively. While many of us are familiar with taking a personal detox (such as body, house or life detoxes), a business cleanse will help you start the year on the right foot.
It's all about understanding your financial vulnerabilities and cash flow pressures and creating a foundation to fund business growth.
Small businesses owners are very time-poor and can at times overlook the need to stop and reflect on the year that was and then plan for the year to come.
By having a clear sense of what did and didn't work for you in the past and setting out a realistic plan for the future, you will be in a better place to help grow your business and succeed in the long term.
Here are my tips on giving your business a financial detox:
1. Default creditors
Look at your past year and identify customers that haven't paid, have made partial payments or continually pay late.
Understand the financial significance of this group and make some decisions around resolving this occurrence in your business. This may include expelling these debtors, enforcing new terms or escalating to retrieve these debts.
2. Review payment terms
Evaluate your terms in relation to competitors as well as client history. If you are continually spending important business hours chasing payments, you may consider new policies such as deposits, pre-payments or COD.
3. Set your budget
What are you looking to achieve in 2017? Set your budgets and forecasts in order to understand key cycles of high expenditure. By anticipating these waves, you can put in place financial structures to source or manage funding.
4. Evaluate your funding providers
Do you have multiple loans in place? How much interest are you paying? It may make sense to streamline this area of your business and review the market for the best offers.
More and more small businesses are turning away from traditional banks and embracing alternate providers with faster access, competitive rates and flexible repayment options that align to your business results, so you are not out of pocket when you have a slow business month.
5. Set and adhere to accounts receivable processes
It's easy to ignore late payments as you focus on your business, but this has a negative financial impact that you need to be diligent in addressing.
6. Confirm your business targets
By defining and building strategy around your income levels you can create the mindset and team focus to deliver your desired outcomes.
7. Keep separate accounts
Although it takes a bit of time and effort up front, there are many benefits of having multiple accounts for your business.
It is often easier to track how much is coming in and going out of your business if you have separate accounts, and by having a clearer understanding of where your bigger expenses are and how often you are paying them you can better plan for them.
It is also easier to save if you have a separate account just for savings, as you are less likely to dip into those funds if they are kept separate.
8. Review your targets frequently
By regularly reviewing your progress and tracking your results you will be able to reset targets and make changes to your budgets and business plans that can help you keep a closer eye on costs and also take advantage of opportunities to grow your business.
Things often don’t go to plan, so you must be ready to make adjustments as things change.
9. De-clutter your workspace
When the space around you is cluttered and disorganised, it can make you feel stressed and overwhelmed, which is not a great environment for success.
Get your workspace in order and ready for the year ahead by doing an office de-clutter. File any paperwork you need to keep and shred and dispose of others. Be a bit ruthless and only keep what you need.
Set out a system for filing and organisation that is easier to follow and that you know you can maintain.
10. Tech de-clutter
Don’t forget about doing a clean-out of all your electronic files and emails as well.
Much like organising your workspace, if your digital files are also in order, it will not just make things quicker and easier to find, but also make you feel ready to tackle the year ahead: organised, refreshed and energised.
Applying these disciplines will reduce stress and set you in the right mindset to take on the year with energy, focus and a plan for success. This is your chance to make 2017 your best year yet!
Mark Hearl is the founder of Sprout Funding.