New Year Financial Resolutions for Small Businesses to Increase Profitability

New Year Financial Resolutions for Small Businesses to Increase Profitability Increase profitability is the major concern for every small business. Here are some financial resolutions for small business to increase profitability.

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New Year resolutions can fall by the wayside soon after they are made. However, those which involve adhering to financial best practices during the subsequent year should be followed with sincerity. For small businesses that often face inflexible budgets and the prospects of further cuts, this is even more important.

One trick to keeping your resolutions on target is to tackle them one step at a time. This rings true for maintaining financial resolutions, as well.

Resolve to abide by the books In other words, maintain accurate books. Keep all expenses recorded and updated.

Resolve to record every transaction as it occurs or immediately afterwards. Write it on a piece of paper if required and then transcribe to your expense log. As a business owner, you need to ensure that all financial transactions are not verbal but are supported by written documentation.

One practical solution for ensuring diligent record-keeping for most small companies could be automation or turning to professional bookkeeping.

Improve financial reporting Resolve for better and if possible, more detailed financial reporting. There are several software options available today that not just carry out detailed bookkeeping and data management, but also present users with accounting analysis and comparisons of other industry players by means of mathematical ratios. Tailoring the information you receive from your financial reports can be accomplished by customizing the setting parameters which you’d like compared and analyzed.

Keep an eye on short-term financial issues Levers that impact business profitability can be short-term financial functions, not just long term improvements. Current and shortterm goals such as close monitoring of cash flow, revenue and expenses, combined with meeting or surpassing customer expectations from your services/products/deliverables can help you increase profitability.

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You can also implement accounting methods such as cost-volume-profit analysis and other cost calculations that will help you evaluate various parameters such as sales on costs, profits, etc.

Getting a clear handle on these factors will provide you with insight into helping you decide where your efforts are best leveraged and whether you should consider outsourcing certain functions to free up key resources for other profit-making efforts.

Continuously improve existing financial information systems Look for information systems that help to standardize information and disseminate it in a timely and easy-to-use manner. Your financial applications should be easy to understand and use.

Information systems should also be customized to provide the right kind of information that is detailed and aligned with your company’s objectives.

Ensuring that information is updated assists decision makers to focus on areas of profitability, as they can confidently make financial adjustments knowing that the data is reliable. Proper categorizing and reporting of financial information empowers the entire decision-making process by providing a clear snapshot of the company’s health.

Make it a goal for your company this year to establish some financial New Year’s resolutions…..and stick to them.

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