There are many reasons to be optimistic about how your business will perform in 2017. Consumer spending is rising, manufacturing and transportation are rebounding, capital spending is increasing, and a new president takes office later this month.
The new year is a good time to adopt some measures that help your business capitalize on an improving economy and get through the sluggish times as well. Here are five steps that will get your business on stronger financial footing and poised for future growth:
Devise a Growth Strategy
You want to grow your business this year, but how are you going to do it? Take some time to put your 2017 goals down on paper, along with the steps you must take to reach those goals. Plotting out a growth strategy helps you pinpoint what’s most important for your company and what realistic solutions you need to implement.
Explore New Technology
If you are still using a ledger to keep track of your company’s transactions, it is time for an upgrade. There are many software programs on the market today that will make your accounting easier, more efficient and more accurate. These products’ automated accounts receivable functions might even help you get paid faster. Online software products like Quickbooks, Xero or Freshbooks offer free 30-day trials and can cost your business as little as $6.30 per month.
Calculate Your Cash Flow
Because cash is the lifeblood of any business, it helps to have a general idea of how much money will flow through your pipeline at any given time. If you have not done so already, now is a good time to start a cash flow budget. Your calculations in a cash flow budget (sometimes called a “cash flow forecast”) do not have to be perfect. Making an informed estimate as to what your cash position will be over the next six months—and revising it monthly—can eliminate surprises and ensure you always have enough money available.
Focus on Credit
Having access to up-to-date, reliable credit information allows you to make better business decisions. Knowing your clients’ credit scores and days-to-pay data can help you better manage cash flow and plan for the future.
On the flip side, now may be a good time to get your own business credit in order. Paying down existing debt, consolidating all your accounts and loans under your business, and even applying for credit you do not currently need are key steps in building a stronger credit rating.
Improving your company’s profit margin starts with cutting fixed and variable costs wherever you can. Can you easily spend less on office space, insurance, utilities and other monthly expenses? Does it make economic sense to lease instead of buy new equipment? Finally, are you taking full advantage of available savings programs? Just a few adjustments in the way you do business can potentially save your company thousands of dollars over the course of the next year.
Consider Funding Options
As you map out your growth strategy for 2017, consider whether or not that growth can be achieved organically. Having available financing, even if you do not need it right now, can fuel faster growth and be a buffer when business slows down. Do some research on different forms of funding—whether it’s a traditional line of credit, asset-based lending or same-day funding through factoring—and decide what is the best fit for your business.