Spring is traditionally seen as a time of renewal and growth. It’s the perfect opportunity for you to rejuvenate your business. As flowers begin to bloom, and the weather gets warmer, consider it a sign to dust off your financial strategy and give your business a fresh, new start. Here's a financial spring-cleaning checklist to help you upgrade and organize your small business this spring.
Review Your Business Plan
Your business plan should serve as your guiding compass. When was the last time you took a hard look at this essential document? Your business plan should be a living document that mirrors the realities of your business and the wider industry.
Perhaps your business has evolved, or the market trends have shifted. Does your plan stand the test of time or seem off-base considering the current market landscape? Review and refine your plan to accurately reflect your business' present situation and future aspirations. Doing this will ensure that your business is primed for success and growth in the coming months.
Analyze Your Cash Flow
With the new season, it's the ideal time to dive deeper into your cash inflows and outflows. Evaluate how things are stacking up and if your cash reserves adequately cover your expenses.
Don't just skim the surface. Analyze past cash flow patterns to identify any areas that require attention. Are there any potential areas of concern, such as recurring late payments from clients or high recurring expenses? Consider implementing a cash flow forecast. This useful financial tool will help you predict potential future cash inflows and outflows.
Assess Your Tax Strategy
Tax strategy is not just about filing annual returns – it’s about year-round planning. Regular assessments of your tax strategy ensure that you're effectively leveraging all available benefits, keeping your business financially healthy and ready for growth.
Tax professionals have a thorough understanding of the intricate tax codes and can assist you in maximizing your business deductions, ensuring you aren't leaving money on the table.
Update Your Budget
Your budget should align with your business goals. If your business objectives have evolved since the last budget revision, it's time to make sure your budget reflects those changes.
Start by examining your current revenue and expenses. Are there areas where you're overspending? Or maybe places where an increase in spending could yield a higher return? Remember, a budget isn't just about cost-cutting – it's about strategic allocation of funds to support business growth.
Check Your Credit Score
A good credit score can unlock financial opportunities like business loans, better repayment terms, or premium credit cards. All of which can provide you with the financial agility and resources to grow your business.
Monitoring your business credit score regularly gives you the insight needed to maintain or improve it. In case there is a dip, you’ll be able to address the issues promptly. Credit reporting agencies like Experian and Equifax can provide you with your business credit report.
Audit Your Insurance Policies
Your business isn't static, and your insurance coverage needs to evolve as your business changes. An audit can be an eye-opening exercise that may reveal gaps in your coverage or instances where you might be over-insured.
Setting up a meeting with your insurance agent can be the first step. Review each policy detail by detail. If you've added new services or new equipment, they need to be adequately covered. Likewise, you may find areas that you've outgrown and no longer need to insure heavily. Also, do not forget to inquire about discounts. Insurance companies often offer them for things like bundling multiple types of insurance, installing security systems, or even just being a loyal customer.
Update Your Financial Records
Financial records offer a clear snapshot of your business’s financial health and help you gain strategic insights. Begin with the fundamentals:
1. Reconcile your bank statements: This ensures that your records mirror the actual cash flows in and out of your business accounts, providing an accurate depiction of your financial situation.
2. Turn your attention to your accounts payable and receivable: Are all the payments duly recorded and updated? Outdated receivables could be an indication of potential cash flow issues, so address them promptly.
3. Review your profit and loss statements: Ensure they reflect your true profits or losses – and rectify any discrepancies.
Digitize Your Finances
Transitioning to digital financial management not only helps you keep your financial records organized and accessible but also opens the door to a realm of possibilities. For instance, think of the convenience of real-time financial tracking or the ability to easily share records with your team, your accountant, or your tax consultant.
Consider exploring treasury management solutions. These tools can increase efficiency, drive profitability, and automate your business processes giving you more time to focus on what matters.
Reflect and Set New Goals
Spring is an opportunity for self-reflection and goal setting for your business. Start by looking back at the past year. Celebrate the milestones you've achieved and take note of new opportunities to explore. Set your sights on new goals that will help your business bloom.
If you're looking for a partner on your journey, we invite you to contact us. At Lakeland Bank, our products and services are designed with your business financing needs in mind. No matter how big or small the task — we're here for you. Our customers say it best.
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