The most common New Year’s resolutions are: lose weight, exercise more and save more money. While your business may not need to shed pounds, most small business owners can agree that saving more money -- that is, cutting costs and keeping more of what you make your own, rather than writing a check to Uncle Sam -- is a smart resolution to make any time of year.
So how can you achieve this goal? Here are five steps to take now that will put your business on the path to better fiscal fitness:
1. Enlist employees. Employees who are on the “front lines” of your business -- dealing with customers, processes and systems -- often have ideas for ways you can cut costs. But do you listen to them? Get departments or teams together to brainstorm ways that costs could be cut without sacrificing quality. Up the ante by offering a percentage of the savings to the people who come up with ideas that you actually implement.
2. Pay attention to detail. Often, businesses fritter away substantial sums on recurring expenses that they don’t pay attention to. This could be a subscription you signed up for a year ago, insurance that you no longer really need, or a monthly membership fee to an organization you’re no longer involved with. With auto-billing so common, these fees can get rolled into your monthly credit card bill to the point that you no longer notice them. And little sums do add up. Go over all invoices and bills in detail and cut out anything you don’t really need.
3. Stay on top of your invoices. One of the biggest cash flow headaches for a small company is slow-paying customers. To speed up the process, make sure your invoicing system is working smoothly. Your invoices should be clear, easy to read, and simply state what is due and when. Make sure you’re meeting any special requirements of each customer, such as including P.O. numbers, and that your invoices are going to the right person at the right address. This may sound basic, but simple errors like putting the wrong suite number on an invoice can cause endless delays.
4. Enable customers to pay invoices faster. Once your invoicing system is up to par, look for other ways to encourage customers to pay you even faster. Depending on your industry and financial situation, this could mean offering a discount for cash payments or early payments. Or it could be as simple as enabling e-payments, which not only enables faster payment, but saves processing time on your end. (And we all know, time is money.)
5. Partner with your accountant. Sure, you have an accountant, but do you only get together with him or her at tax time? A good accountant can help shape up your business’s finances all year long. Enlist your accountant to give your company a checkup. What could be improved? Where could you cut costs, free up cash, or make more by putting profits back into the business? Check in with your accountant once a month to follow up on results, fine-tune systems, and make sure your company is on track.
Getting your business in good financial shape at the start of the year ensures you’ll be ready to take advantage of the opportunities that come your way all year long.