How much you can spend this year? Can you invest in new equipment in your business? Can you implement some important and expensive projects to improve your business? Can you expand your small business team?
This questions, and many more as this will depend on your small business financial health. Because of that, you as an entrepreneur will need continuously work on improvement of your financial.
Lets look in one simple, but a powerful process that will help you in your efforts.
1. Start With Deep Analysis of Previous Year
The same as your other efforts on improvements in your small business you will need to start with deep analysis of your previous year.
Your analysis need to be based on many questions. Some of them are listed below:
- Is my last year financial plan fully implemented?
- What was wrong, and what was the biggest success with the implementation of the plan?
- Is my cash flow from last year something that I was planning to be?
- What about profitability from the last year?
- How much costs my business have last year?
- Are the sales numbers as expected?
- Is there something that will need to be improved?
2. Continue With Analysis of Current Financial Situation
When you finish with the last year, you can start with the current financial situation in your business. You need these numbers if you want to implement excellent improvement program.
The questions are the same. You need to analyze your current sales numbers, their effect on your current cash flow, your profitability, and possible financial needs for the future of your business.
3. What’s Three Important Things That Will Shape This Year According You
Now, you can start thinking about the future with more concrete subjects. You need to know trends and different factors that can be powerful in shaping the look of this year.
You need to ask following question: What’s three most important things that will shape this year according you?
4. Define Key Financial Metrics
This step in the whole process simply asks to answer following question: What you will measure to improve your financial for 2013?
One of the most important measures will be:
- Cash-in and cash-out,
- Costs and expenses,
- Return of investments, and
5. Plan Your Cash Flow in Advance
Now, when you have your analysis results, know what can be influential this year and what you need to measure, you can start with planning activities of your cash flow for this year.
Cash flow is important part of your overall financial. You will always need to have positive cash flow if you want to continue with your small business.
Planning cash flow will force you to make a deep consideration of your future income, costs, profitability and available cash to finance your daily business operations.
Don’t even think to escape from this step in the process. Here, you will come to many ideas how to improve your financial for 2013.
6. Become More Lean Enterprise
More lean enterprise means that you will produce the maximum results with optimal use of your current resources.
Lean thinking ask from you to try to improve every aspect of your small business and in such a way to produce better products and services, quickly than others with the lowest costs as possible.
7. Increase Your Sales Numbers
Your overall finances in your small business will depend on your sales numbers. If you want to improve your financial, you will need to implement plan for improvement of your sales results. More sales, means more income for your business. More income means more profitability if you have clever spending behavior.
8. Spend More Smartly
If you spend more money on unimportant stuff, you can’t expect that everything you make in this process will give better results.
You need to be smart enough to implement optimal spending mechanisms in your business.