It’s that time of year again. We know everyone is thinking about Christmas shopping and parties, but don’t forget it is almost the New Year. What better way to start the new year than with a few New Years Resolutions, particularly some financial ones!
Here are our top 5 new years resolutions to have you start the new year without a financial hangover.
1. Develop a budget
Setting out a budget for the year ahead is critical. How do you know if you have spent too much if you don’t have a budget or goal. Try setting budgets for each expense line monthly. You can use past years expenditure to estimate what you will spend this year. You might want to try and decrease some areas or even increase them if there is an area you want to grow or develop. But setting a budget is only half the battle, you then need to be disciplined in measuring your performance against that budget. Make sure you are reviewing your actual against the budget at least monthly. For businesses that have high expenditure it may be beneficial to review this weekly so you can address any blowouts quickly.
2. Stay on top of cashflow
Cashflow helps keep our businesses functioning. You need to have a good flow of cash coming into the business to cover the money flowing out. Look at where there are blockages in your cashflow and see where you can adjust things. Rather than sending all invoices at the same time of the month you could try staggering them to try and get a better flow of income. Where you charge at the completion of a job, consider charging up front so that you already have the cash to pay for materials or staffing.
3. Move to the cloud and automate
If you haven’t moved to the cloud yet for your accounting then make 2019 the year that you do. Cloud accounting gives you greater flexibility and allows you to automate many of your processes to ensure that your business finances are working optimally. It also allows advisors, bookkeepers and accountants to access reports and data remotely so that they can give you more timely support.
4. Balance Personal vs Business Debt
If you are a business owner, then chances are your personal debt and your business debt at one point or another has been intertwined. Whether you borrowed from the business for personal use or used your house as collateral on a business loan. While we understand that sometimes this is inevitable it isn’t ideal. Make it a priority in 2019 to see where and how you can separate your business and personal debt.
5. Educate yourself
Knowledge is power and you will never regret your education. While we aren’t suggesting you get an accounting qualification, investing in your knowledge is useful. While you have trusted advisors and experts in this area you are better equipped in working with these people if you are armed with as much knowledge as you can. We recommend that you start with understanding all the different reports that you can generate in your cloud accounting system and how they can help you make better decisions.
If you are questioning anything that puzzles you, consider linking with a mentor (Strategic Advisor) that can guide you through your business challenges. Speak to us today.