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Whether you’re new to business or a seasoned entrepreneur, setting goals for you and your business at the start of the year can give your team direction and a sense of purpose that they can use to motivate them throughout the year. Improving customer engagement, increasing sales or fine-tuning operational systems are all worthwhile goals to set and will likely have a positive impact on your company; however, several other financially focused goals could have a similar impact.
According to the experts of Kiplinger Advisor Collective, implementing one or more of the following seven goals can help ensure your business is functioning at its best and ready for any hurdles it may face. No matter whether you set these goals at the start of the new year or a few months down the line, your business can benefit from better financial preparedness.
Prepare for common financial calamities
“Having built and run several businesses, I am always surprised by how underprepared business owners are for financial calamities that are often commonplace. To address this, I recommend that businesses run ‘Financial Fire Drills,’ a concept that we standardized for our individual clients to ensure there was a plan for eventualities. Having a thought-out plan for events — including the financial impact of the loss of a major customer, the death or disability of a key stakeholder, an extreme change in regulation or other shock — is not something you want to contemplate when it occurs. Habitually running these drills would go a long way to revealing exposure and creating financial stability for the investors.” — H. Adam Holt, Asset-Map
Implement a robust cash flow management system
“One financial strategy businesses should implement is a robust cash flow management system. Understanding how revenues flow in and out of the business is vital. You can learn how the business is growing or stalling and what products or services are working or that need to be revamped or marketed differently. It can also help with cost-cutting measures, because many of us experience business creep — similar to lifestyle creep — where we’re adding on systems and expenses that may not be adding value and are eating away at profits.” — Jason Vitug, Phroogal
Coordinate with a tax adviser
“I think more businesses should coordinate with their tax adviser and proactively address tax planning, which can also include implementing a retirement plan or modifying an existing one. Not only can having a retirement plan help the business owner build wealth outside of the business, but it can also help them save money on taxes and help with employee retention.” — Marguerita Cheng, Blue Ocean Global Wealth
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Hire freelancers to help support your weak points
“Determine your business’ weak points. Then, hire freelance contractors specializing in those weaknesses. Have the contractors fill in the gaps until the weakness is solved.” — Shawn Plummer, The Annuity Expert
Utilize executive bonus plans and buy-sell agreements
“Businesses often leave themselves unprotected from a talent and unexpected transfer perspective. Businesses could consider utilizing permanent life insurance in the form of executive bonus plans to retain key talent or buy-sell agreements that help efficiently transfer the business in the unexpected passing of partners. Talent drains and unwanted partners bring less desirable outcomes.” — Dr. Preston D. Cherry, Concurrent Financial Planning
Build up an emergency fund
“One key financial strategy I think businesses should consider for this year is implementing an emergency fund, if your business hasn’t already. This would help your business sustain itself during any situation and would at least give your business a financial cushion to execute essential projects while also maintaining employee retention and business relationships.” — Justin Donald, Lifestyle Investor
Review (and potentially restructure) your debt and pricing strategies
“As small businesses head into the rest of the year, I believe they should consider implementing a comprehensive review and potential restructuring of their debt and pricing strategies given the volatility of interest rates. Small-business owners should be looking at their options to hedge against these fluctuations, which can affect various aspects of their operations and financial well-being.” — Ramona Ortega, My Money My Future
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.