By Affiliate Carol Coughlin, CEO & Founder of BottomLine Growth
The approaching New Year can spark a wide range of emotions for those who celebrate. But for most business owners, ringing in the New Year prompts one of two emotional responses:
- There is a feeling excitement and optimism about taking the action steps and implementing the success plan that the business owner created and committed to in December.
- There is a feeling dread and regret because the business owner did not take time to set success-focused commitments and action steps in December.
Thanks to the probability that one of these scenarios will occur if no time is spent assessing, planning and committing to action (and not likely the scenario we want), we at BottomLine spend our year-end helping our clients avoid #2 as though their lives depended on it. And, truthfully, the lives their businesses actually do.
The problem is that this time of year is very busy. Key team members may be out on vacation. You, the owner, may be out of pocket as well. But here’s the deal: December will never, ever, EVER be as hectic as January – the time of year when the business world seems to spring into action all at once.
Clearly, now is the time to kick into gear and create your financial strategy for 2012. Here are just a few of the action items business owners need to commit to in order to prevent dread and regret from being the encore to Auld Lang Syne:
Commit to Preparing Budget and Projections — ASAP
Many businesses do not have a budget, and that means they are actually running blind. Your commitment is not only to create a budget for 2012, but to update it regularly. Yesterday’s business climate was based on change and unpredictability. We predict it will remain that way for some time. A monthly budget review will allow for continual re-assessment of the business conditions and the assumptions you are making now.
Commit to Controlling Your Working Capital
Working capital is your accounts receivable from customers minus your accounts payable to vendors and inventory. By managing these three items, you can control and improve your cash position. Too many businesses don’t get invoices out on time, so cash comes in too late. Plus, they pay expenses too soon, so cash goes out too fast. Take charge of working capital and create a cash flow that supports success.
Commit to Tracking Profitability By Segment
Although most businesses offer more than one product or service, few track their profitability that way. Tracking profit and loss by segment helps you ascertain where your revenue is coming from and, also, what is draining it. Making product and service adjustments is far easier when you have hard data instead of hunches.
Commit to Taking a Hard Look at Your Financial Team
Companies regularly upgrade operations and sales teams, but many put zero resources against the financial department. Strong financial management requires stellar bookkeeping and accounting, but it goes far beyond those functions for any company serious about profitable growth. Adding a part- or full-time Controller or CFO, or re-assessing those currently holding these positions, is likely the single most important action step toward ensuring your company reaches the next level. Why? Because growth (at any rate) without a solid financial strategy to steer it usually ends up looking a lot more like failure than success.
Commit to High-Level Financial Advisors WITHOUT Committing to their Full-Time Salaries
As you assess your financial team, commit to keeping your company’s profitable growth objective in mind by outsourcing first. If your company is truly ready for a full-time CFO, your outsourced CFO expert will make that recommendation. What’s important is to get this type of advice sooner rather than later. Companies that avoid developing a strong financial strategy open themselves to dread and regret this time next year. There is nothing sadder than witnessing a business that, in theory, is committed to profitable growth, but that has no legitimate data or viable plan on which to base decisions or move forward from. Adding new services or products, augmenting production capabilities, designing a brilliant ad campaign without financial perspective and strategy is like dropping the ball in Time Square in September.
Remember, excitement and optimism are typically set in motion long before they are felt – simply by laying the groundwork. This means, you don’t have to hope the New Year brings your business success, you can plan for it.
BottomLine Growth Strategies was founded on Carol Coughlin’s passion and mission to give small- to mid-size business owners the same high-level financial strategy guidance usually reserved for large corporations. So if you can keep these commitments without outside support, that’s great. If you can’t, you’re not alone. And it’s time to commit to getting it.