Making New Year’s resolutions may be a bit of a cliché, but there’s no question that setting goals is one of the best ways to drive results. As you look to build on your success in 2017, here are seven financial goals to move to the top of your list.
1. Update Your Bookkeeping System
In many small businesses, bookkeeping is a monthly chore of sorting through boxes of receipts and balancing the checkbook. If this sounds like your business, you may be missing one of your best sources of information.
A well-kept bookkeeping system is the brain of your business and tells you what every cent you have is doing for you. Many online bookkeeping systems now connect directly to your cash registers, inventory systems, and other business applications to automatically update everything for you.
This lets you skip the chore of entering receipts and gives you the information you need to that you can more efficiently run your business.
2. Plan for Retirement
The old personal finance strategy of “pay yourself first” also applies when you own a business. While it’s tempting to reinvest every extra dollar you earn, you need to plan for the day when it’s time to move on to the next chapter of your life.
Retirement planning can also provide current benefits. A SEP IRA or individual 401(k) allows you to defer paying income taxes on up to $54,000 of your personal income. If you make retirement contributions for employees, you can usually deduct those contributions on your business tax return.
3. Revamp Your Marketing Strategy
Two of your most important financial questions are how much does it cost to acquire a customer, and how much does your average customer spend? Your marketing strategy should revolve around those two questions.
Email campaigns are one of the best ways to achieve this goal. Once you write your newsletter, your costs are virtually nothing because you can send it to as many customers as you want without paying for postage, radio listeners or online ad clicks.
You can collect email addresses with a subscribe button on your blog, offering a discount on your website, or by creating a loyalty program. Once customers are on your list, that added engagement will keep them coming back and spending more money.
4. Get Rejected
Fear of rejection is natural, but rejection is something business owners should strive for. If customers never say no, you haven’t reached your full potential.
If no one ever says you’re too expensive, you can likely raise prices. If a prospect never says they don’t need your services, you have room to expand your reach and learn how to serve new customers.
While closing deals feels better, getting turned down will provide more fuel for your growth.
5. Create Free Cash Flow
Your available cash flow will define whether you’re able to take advantage of opportunities to reach your goals. You don’t want to miss out on a big order because you can’t buy enough inventory or have to halt production until you’re able to repair a key piece of machinery.
One of the first places to look for additional cash is in your bookkeeping reports. Are there bills you’re paying early that can wait? Are there customers that are slow to pay that you can collect from sooner? Are there any unnecessary expenses you can cut?
Once you’ve gotten your finances in order, you may still have cash needs. While personal finance experts often recommend avoiding debt at all costs, business finances should be view differently.
If you can increase your profits by more than the cost of interest, it almost always makes sense to take out a small business loan to give you the additional cash you need to make the investment.
6. Do Your Taxes Throughout the Year
If you meet with your tax accountant a few weeks before your tax return is due, you could be leaving money on the table. At the end of the year, all your accountant can do is maximize the business deductions you’re legally allowed to take.
If you start planning early, your accountant can help you make business decisions that will qualify you for additional deductions or tax credits. For example, you may want to move up a purchase to take advantage of an expiring credit, or you might want to wait a year because you expect to shift into a higher tax bracket.
Also remember that crossing thresholds such as number of employees, total revenue or other measures could disqualify you from certain tax breaks or qualify you for new ones. To make a well-informed decision and avoid a surprise tax bill at the end of the year, you need to figure out any move you’re considering might impact your taxes.
7. Set Actual Targets
With all of your goals, it’s important to set real targets that you can strive for and achieve. Instead of just increasing your sales, increase your sales by ten percent by the end of the year.
The popular buzzword for this is SMART goals
. SMART stands for specific, measurable, achievable, realistic and timely.
Having a specific and measurable target allows you to track your progress instead of forgetting your New Year’s resolution by spring. Making the goal achievable and realistic keeps you from giving up because the goal is too hard to achieve.
Finally, giving yourself a deadline means you’ll achieve your goals in 2017 so you can set even higher goals next year.