written by Melinda Thurman
Whether it’s to exercise more, lose weight or eat better, the most common New Year’s resolutions center around our health.
But our comprehensive health doesn’t end on the treadmill or at dinner table—it also extends to our bank accounts. Financial security expert Pamela Yellen explains in Entrepreneur why your fiscal fitness should be as rigorous as your physical fitness:
“With the new year, many entrepreneurs resolve to get physically fit. But fiscal fitness is just as important: When it comes to the future of your own business, are you…prepared to endure fluctuations in your markets, new competitive challenges, withering credit and the trials of maintaining cash flow even when receivables are lacking? Or are you out of shape, coasting along and hoping for the best?”
Unfortunately, Yellen explains, many businesses are not in proper fiscal shape to “weather the challenges they face.” That’s why we’ve compiled six tips to keep your business fiscally fit in 2019:
1. Focus on budgeting.
Cash flow keeps businesses running, which is why business owners should always have a basic understanding of expenses and sales throughout the year. By tracking your spending and budgeting, you can analyze operational expenditures to cut costs and plan for new opportunities.
Fit Tip: Analyze whether your historic expenses are reasonable. Revisit your insurance plans, health care packages, or wireless plans to see where you can renegotiate to save money.
2. Develop a strategy.
Strategic planning is important because it forces you to focus on the longevity of your business. Being proactive provides you with the awareness of what you’d like to achieve and how, which will help you stay on track with your goals over the next year, decade, and beyond.
Whether you’re launching a new service line, adding an associate, outsourcing office tasks, or thinking about long-term succession planning, you need to anticipate growth and strategize how you plan to get there.
3. Who’s on your team?
It takes a village to properly support all the facets of a healthy business, and your team doesn’t end with your internal staff. Your accountant, banker, attorney, financial advisor—each has his or her own expertise and contributes to your business’ vitality. Your team will vary based on company size, but you should never depend on just one or two people to play the role of four or five.
Fit Tip: You never know when a connection will turn into a lead or partnership. Consider joining a professional association to meet others in your industry and share best practices.
4. Get a plan, and plan to take action.
Most business owners don’t think about tax planning until the year is over, and they end up overpaying. Being a bit more proactive and starting this discussion in the fall can bring a better understanding of what strategies are readily available while there’s still ample time.
The recent Tax Cuts and Jobs Act made significant changes that impacted company vehicles, meals and entertainment, charitable giving, used and new property, and qualified business pass-through deductions. Whether the tax law eliminated deductions you were banking on or added deductions you can now take advantage of, it’s never too soon to cultivate long-term and short-term plans with your accountant or financial advisor.
5. Do your homework.
Sometimes you have to spend money to make money. It’s possible to be a healthy business and take out a loan or line of credit—but only if you do your homework. Get as much information as possible and allow your team to assist you. Accountants and financial advisors always have your money on their mind and are there to provide guidance.
Fit Tip: Even if you don’t need it right away, having a line of credit can provide a reliable backup if sudden expenses arise.
6. Healthy personal finances.
As the face of your organization, it’s equally important to have healthy personal and business finances. When applying for a loan, lenders will consider your credit score, which can be greatly impacted by debt, late payments and hard credit checks. Mistakes on your personal taxes can also be expensive and negatively impact your business should the IRS file liens against your properties or business.
That’s why it’s so important to work with someone who can help you make smarter, more informed financial decisions. Whether you’re an individual looking to develop a financial plan or a small business owner looking for outsourced accounting, we can help you with strategic planning, wealth management, consulting, and tax services.
Ready to strengthen your financial health? Contact The Whitlock Company to find out how we can set you up for success.
Melinda Thurman, CPA, is a partner at The Whitlock Company, a full-service CPA firm offering a range of professional tax, audit, accounting and consulting services in the Midwest. Learn more at www.whitlockco.com.