The end of 2019 is almost here but before starting to wind down too much, it’s worth putting some thought into what your business will look like in 2020.
Running a successful business starts with the fundamentals and getting those little things right makes all the difference. Focus on these and you’ll build a strong foundation for the coming year. So if you’re a small business owner, here’s our to do list to prepare for 2020.
Reflect
It’s well worth setting some time aside to reflect back on the year that’s been. Ask yourself, what worked? What didn’t work? This is also the perfect opportunity to bring your team together and ask them the same questions. Get their feedback and ideas on how the business can be improved and what can be streamlined to remove obstacles preventing them from being as productive as they can be. Listening to your employees, and following through with action, can help them feel empowered, engaged and happy to come to work so it's a win for your employees and your bottom line.
Talk to Suppliers
Supplier relationships can have a huge impact on how efficiently your business operates and it's profitability. Now is the time to sit down and review all suppliers and go back to your favoured suppliers to see if you can arrange a more attractive deal for 2020. And, it's not only about price - payment terms, quality of stock and return policies are all important factors that shouldn't be overlooked. When speaking to your suppliers, it's important to remember that they want your business too so negotiate firmly and you might be pleasantly surprised with the outcome.
Review your Customers
The 80 / 20 Rule is useful when thinking about your customers. It's common for any business that 80% of your profits come from 20% of your customers. It's also often true that 80% of the headaches come from 20% of your customers.
It might be hard to turn down business but not all customers are good customers and sometimes you just need to save the headaches and say no. Equally, you should always be looking for ways to sell your good customers more. Also, look hard at what makes them valuable to your business, and actively try to find more customers like them.
Review Expenses
It's good practice for all business owners to review outgoings regularly and the end of the year is a perfect time. A detailed look through expenses can help you trim some fat and also improve the accuracy of your forecasts for 2020. If you can save just a percent or two on your biggest expenses, it will make a big difference to your profits. And a line-by-line review of all expenses will almost always find things that can be tightened up.
In the Balance
It’s time to put your numbers under the microscope. Review and scrutinise your balance sheet, P&L and cash flow reports – and be brutal. If your cash flow or profit is less than you expected, then do the digging that's required to get to the root cause. Only then will you know what to do about it.
It's important to identify what went well, what needs addressing and where things can be improved. If you haven’t moved your accounting to an online accounting service provider, such as Xero, it might be a good idea to make the move. Cloud-based accounting software is easy to use and can give you a clear, precise and timely snapshot of your finances.
Invoices & Cash Flow
The end of the year is a good time to review your aged debtors and hit the phones to get your invoices paid. It's nice to start the year with your accounts receivable in good shape so get on top of it now so you don't have to worry about it on your holidays.
Our Best Practice Receivables Management blogs have some helpful tips that might be worth another look.
By tracking your cash flow in 2019 and then looking at your 2020 forecasts, you’ll have a better understanding of what you can actually achieve in the new year. And if it looks like there might be periods of tight cash flow, now is the time for putting contingencies in place so you aren't caught short.
Budget 2020
A major reason small businesses fail is the lack of cash flow planning. You may have an amazing product or service, but if your business does not have access to cash when you need it, the risk of failing is high. Plan and maintain a budget that’s realistic, accurate and up-to-date with projections for income and any expenses that can occur in the new year. Good financial management is the key to success.
Now is the time to take the lessons and experiences, both positive and negative from this year, build on them and turn them into future growth and opportunities.
In Part 2 of this series, we’ll have a few more to-do ideas for you to think about before the year is out. If you's like to discuss invoice finance options for your business, please call us on 1300 760 205.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].