Here are three New Year’s resolutions for your financial health:

a.   Really question your assumptions about “necessary” expenses – especially if you’ve been operating the same way for years. Can you use less expensive computer software or even hardware – will Photoshop Elements suffice instead of Photoshop, for example? Are employees really using all the benefits you offer? If not, drop the benefits that add no value but rack up expenses. Are there warranty contracts that offer little to no benefit? What else is adding to your expense base but adding no value?

b.   Reevaluate key vendor choices. Can you lower your benefit costs by switching PEO companies? (We did.) Do you have other options for your office or retail lease? Suppliers? Resolve to wring at least 10% savings out of two key vendors next year – and watch those savings fall to the bottom line.

a.   Start the year with a cleaned-up balance sheet. Deal with the “problem payers” as aggressively as possible.

b.   Reexamine your invoicing process to make sure you are billing as early as possible. Can you bill more frequently to improve cash flow? It’s easy to let this go – it’s no one’s favorite activity! But it’s critical to the health of your business.

a.   Growth! If the economy picks up or you are able to buck the trend, you’ll need working capital to finance your growth.

b.   Double-dip recession. We’re not out of the woods yet, so how will you manage if your business swoons? Revise your plan for this worst-case scenario and make sure you have a good handle on the cash reserves that would be required.

c.   Then sit down with your business banker or backers and figure out how you’ll obtain the working capital you need for either of these outlier cases.