It's a new year, and that means it's a fresh start for your business. Most businesses took a hit last year, and if that's your case, you must care for your finances this 2021 and try to make up for the lost profit. Implementing these tips will help you elevate your finances and help ensure that your small business is booming this 2021.
And remember, financial planning also means figuring out how to better reach your customers with social media, SEO, and other digital tools, as well as making sure your accounting, financial projections, and business plan are up to date.
1. Establish Short and Long-Term Goals:
Having a sense of the goals you want to achieve and how much they'll cost – can be powerfully motivating for setting revenue goals. Outline your short and long-term goals for every quarter. Don't try to juggle them all at once, instead prioritize and label them as critical, need, or want. Therefore, if push comes to shove, you know what to fund and focus your revenue first.
Coming up with a specific action plan will help you know what time frame and business capacity you are working with. So, make sure to add target dates to your financial goal worksheet. And most importantly, that your objectives are SMART: specific, measurable, action-oriented, realistic, and trackable.
2. Make 2020's Profit and Loss statement:
It goes by many names: profit and loss statement, income statement, earnings statement, revenue statement, operating statement, statement of operations, and statement of financial performance. But no matter what name you choose to use now is the time to start taking stock of 2020. Gather all your 2020 financial statements and come up with a summary of your business revenues, costs, and expenses for a specific period of time, typically a year or a fiscal quarter. A profit and loss statement is an essential part of any business plan and a great way to gauge how your business is doing.
This year especially, look for atypical changes, such as peaks in spending during certain months or a shift in your budget due to the pandemic. If you see something out of place, formulate a plan for next year.
Take some time to check in with your emergency savings fund. If it's flawed or even nonexistent because 2020 ate all of your savings, you should tackle a solution to get it back into place this 2021.
3. Start Using a Budgeting Tool
Choosing the right budgeting tool can help you stick to your spending plan, allowing you to reach financial goals and improve your financial health. These tools can help you visualize and understand exactly how much money is coming in and going out each month. Something essential when it comes to managing expenses, paying down debt, and preparing for the future.
Here are some options you might want to consider:
Spreadsheets: If you want a highly customizable way to track income and expenses, opt for the useful old-fashioned spreadsheets. You can create your own or download it online. Also, Microsoft Excel and Google Sheets offer free budget templates to users.
Free Budgeting Websites and Apps we recommend: Mint, a smartphone-based budgeting application with comprehensive services at no cost; SoFi Relay, which makes it simple to connect with a professional to discuss financial goals and strategies and Goodbudget, a budgeting software intended for those who like the idea of an envelope cash management system but don't want the hassle of carrying physical envelopes.
4. Build an emergency fund
An emergency savings fund is vital during these very unpredictable times. Especially if you are a small business owner and your business takes a downturn, or you run into seasonal fluctuations in cash flow.
You might want to adjust the total amount in an emergency fund — while financial planning experts typically suggest three to six months of living expenses, after this year, people may want to strive for nine months or more.
Additionally, consider having an emergency personal fund. It will give you greater peace of mind to make more confident decisions for your business. If you know that your family is protected in case of a financial emergency (car accident, major home repairs, natural disaster, medical bills), you will be able to focus better on running your company.
5. Explore Alternative Funding Options
Every small business has the power to create jobs, spark innovation and help communities prosper, however, when it comes to getting approved for working capital, they often have a hard time getting access to funds or qualifying. Don’t let that get in the way of your business growth and recovery this 2021, remember, if you are a small to midsize business owner, you are the major force of the U.S. economy.
Maybe it’s time to look in a different direction. Have you considered alternative funding options? These tend to be more focused on the future profit potentials of your business as opposed to your past credit history.
One Park Financial funding programs work as meaningful and substantial connections with funders that believe that small and mid-sized businesses can succeed too. We truly understand the potential that small business owners have and the great difference that working capital can make when it comes to reaching the goals you’ve set out to find this year. In fact, our company was also funded by small business owners. And throughout the years we’ve worked hard to establish trust and transparency among hundreds of clients.
Imagine quickly paying off old debts, bills, and renovating your inventory. You can reach these goals and save yourself from years of unwanted high interest rates, trying to pay off bank loans.
For help in understanding your funding options, you can turn to our funding experts. We work with a network of funding sources, advocates for small business owners and bilingual financial experts that will happily guide you through the funding process and explain your options. If your business has been opened for more than three months and generates revenues of $5,000 or higher, you too can be a part of this network of thriving business owners.Get pre-qualified in less than 5 minutes today!