2020 was a roller coaster year for businesses, but a bumpy road still lies ahead. More than ever, businesses need to understand and manage their finances, and more importantly, put measures in place to protect them as the landscape still shifts below their feet.
If you want to survive 2021 and increase the resiliency of your business moving forward, here are 8 essential tips to consider:
- Set new goals
While it may feel pointless to set goals when the world keeps changing, goals motivate us. Goals ensure that business moves forward while hopes and dreams do nothing. For the rest of 2021, set yourself one big focus, break it down into realistic monthly goals and work on achieving these daily.
- Build your budget
Use your experience from 2020 to build your budget for the year ahead. What was revenue like this time last year? How did it compare to profits in the Summer of 2020? What trends do you see across seasons and as pandemic restrictions ease and tighten? Have your expenses increased or decreased during the pandemic?
- Know your tolerance for financial risk
2020 caught hundreds of thousands of businesses off guard, to the point where they had to close their doors for good. To prevent this from happening in the future, you need to know your tolerance for financial risk. For example, how much cash do you have in the business account? How many days could you last if business suddenly stopped?
- Monitor your finances consistently
Knowing your figures daily is essential for making sound business decisions as the economic landscape continues to change. Invest in the right practice management systems (e.g. Xero) that will help you keep your thumb on the pulse of your business.
- Understand your cash flow
Cash flow problems are the main reasons that businesses fail. To prevent this from happening, be aware of when you actually get paid from sales and when expenses are going out. While you may have a lot of sales on paper, if you’re not getting paid in time, you’re going to run into some serious problems. Again, practice management systems can help with this as well as cash flow projections.
- Put money aside for a rainy day
It can be difficult to plan for emergencies such as the pandemic, but if you do, you’ll be among those businesses that make it through turbulent times. Plan to free up money to save so that you can start building that pot of money for a rainy day. For example, go paperless, stick to your budget, and invest in practice management software to improve productivity and time management etc.
- Listen to what your customers need now
It can be really tempting to panic during times like this and to go full steam ahead with trying to win more clients. However tempting it is, the best thing you can do is focus on really servicing your current client base. They are your biggest fans – they already know you, trust you, and hopefully, love you – so ask them how you can serve them better. If you listen and adapt your products/services to their needs, you’ll stay in business and are far more likely to generate more through referrals.
- Be agile and adaptable
The businesses that thrived during the pandemic are the ones that adapted quickly. They were the ones who identified opportunities and acted on them quickly or who stepped up and provided superior customer service. We can’t always prepare for the unknown, but we can control how we respond to it. Be open to change and do this quickly, and you’ll be one of those businesses that make it through.
For more information or to discuss any issues raised above please contact Simon Bell by phone on 01376 571358 or email [email protected] . This article is written in general terms and therefore cannot be relied on to cover specific situations; applications of the principles set out will depend on the particular circumstances involved and it is recommended that you take professional advice before acting or refraining from acting on any material in this article.