We’ve spent the last year on a crazy roller coaster of economic issues. It looks like funding has started to loosen up a bit and we may be heading to an uptick for small business owners. But you and you alone, are responsible for ensuring there is enough cash to support your business. So as the year draws to a close, it’s important to take a look back at your business finances and assess what went well and what didn’t work so well to create the foundation for a better future. Here are eight things to consider.
1. How long does it take from job complete to billing? Can you get your invoices out the door faster next year? What can be improved in the process to make the payment turnaround time better?
2. Is there a better way to get paid for what you do? There are no rules that say you must do the work and then get paid. Remember, you are not a bank. Can you negotiate your contracts differently with payment milestones so you can do a better job of keeping your cash flowing?
3. What could be packaged together to give your business a good cash payback and add value for the customer at the same time? Look closely at your products and services and think about the feedback your customers have given you throughout the year. What can you package differently that will help your customers and your bottom line at the same time?
4. What other businesses complement yours who could be potential partners? Could you create an agreement to sell each others’ products or services or develop a joint product or service and split the proceeds?
5. How long does it take your company to get paid? Have payments from customers stretched from 30 days to 45, 60 days or longer? Take a good look at how you can close that gap. You might be able to offer a discount or other payment options. Or maybe it’s time to fire the slow paying customer.
6. What do your past sales patterns tell you? What are you selling that’s sold the best this year? Why did that happen? Is there a way you can duplicate it or increase it for next year?
7. Is your inventory collecting dust? How can you move that old inventory out the door so it’s not costing you money? What processes do you need to change to ensure none of your inventory collects dust next year?
8. Does your cash flow reality match your cash flow budget? Were you realistic with your predictions this past year? If not, why not? Was the result better or worse than you anticipated? Why? How well are you positioned for the next six months? If you don’t have any idea what is happening in the next few months from a cash inflows and outflows perspective, how can you operate your business?
Lots of questions, but I know you have the answers. Over the next couple of weeks, sit down and dedicate the time to find the answers for your business. Develop an action plan to put the mechanisms in place that can help you have a better business from a financial perspective next year. We’re counting on you.
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About the Author: Denise O’Berry is a small business expert who provides tools, tips and advice to help small business owners be successful. O’Berry is the author of “: Strategies for Making Your Business a Financial Success.” Her blog can be found at .