With a new year and new century well under way, its time to take a new look at how youre doing business. Evaluating your business at least once a year is a must.
Looking at your companys finances is a good place to start. By forecasting revenues and creating a cash-flow projection spreadsheet, you can identify changes or problem areas with your business strategy and generate a more accurate cash-flow projection. This should be done at least annually, if not semi-annually or even quarterly.
If your business is going to need financing, researching options must start early. Many sources locally offer small business financing, ranging from credit lines and loans from banks to equity investments from individual investors. Organizations such as SCORE and the Small Business Administration (SBA) can help you find financing, and SCORE has a workbook, How to Secure Financing, which can be obtained by calling (800) 634-0245.
Tracking income and expenses on a weekly basis will help you stay within your budget. Computer accounting programs and certain debit cards, such as a Business Check card, help you organize receipts, reconcile purchases and monitor expenditures. Organization is a necessity, not a luxury, and that includes organization of financial documents and statements.
Make sure your financial statements conform to Generally Accepted Accounting Principals (GAAP) and that all asset and liability accounts are fairly stated. This will help avoid unnecessary and costly accounting fees later.
Once you review your finances, re-evaluate your actions and decisions in conjunction with the business plan. This will help you understand if you are focused on short-term needs or long-term goals, reacquaint you with your business objectives and confirm where the business should be in three years.
Your time and energy should be focused on running the business. Other duties, such as accounting, payroll, human resources, manufacturing, information systems and marketing can be outsourced to save time and money. In addition, you should have a solid understanding of how much you want to grow. Too much growth too quickly is not always a good thing.
When evaluating your business, plan for the upcoming tax season. Look for tax deductions. A retirement plan, for instance, makes sense from a tax standpoint and will be popular with employees. Establish a pre-tax medical and dependent-care reimbursement plan for your employees that wont cost lot to administer. These plans also will save you on payroll taxes.
Lastly, good employees are the key to business success, and getting them involved in strategic planning is an excellent way to keep your business moving forward. Have your employees draft a list of things they think the business will need to reach the next milestone, including resources, benefits, changes in operating procedures, and equipment.
Work with your staff to set financial and nonfinancial goals and objectives for the year. At the same time, re-evaluate your compensation packages to make sure they are still competitive.
And take the time to teach your employees to think profitability. Thats a lesson which will ultimately add to your companys bottom line.
Louis P. Stanasolovich, named one of the best financial advisers in America for the last four years by Worth magazine, is founder and president of Legend Financial Advisors, Inc., a fee-only financial advisory firm located in the North Hills. Reach him at (412) 635-9210. The firms Web site is located at www.legend-financial.com.