Beginning the New Fiscal Year on the Right Note: 5 Must-Adopt Financial Practices for all Small Business Owners
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The beginning of a financial year marks one of the most eventful and busy periods for any business, irrespective of its size. It is that crucial the time when businesses get done with all their taxes for the preceding year and are actively engaged in planning for the financial year ahead. For small and medium business owners, this period serves as the ideal time to lay emphasis on and proactively engage in their business and all its integral operations like accounting, IT, and other such administrative functions. At this integral point, small business owners may keep in mind the following business practices and adopt these at the beginning of a fiscal year to prepare themselves better for what the year has in store for them:
Analyze Your Business’ Current Financial Health
Any business survives and thrives when it has sound financial health. Therefore, it is necessary for businesses to review their financial performance from the previous year to chart out a plan of action and set goals for the new one. Cash flow from all the financial activities of the preceding year, be it regular operations, investments, revenue generated, assets purchased, payments made, loans availed, or any other channel should be thoroughly analyzed and evaluated to identify the need-gap and plan for a sound financial health accordingly. Post such an analysis, businesses can set up measures like a line of credit to avoid cash flow issues. For instance, there are digital lending platforms providing tools for processes like a line of credit, which subsequently help in the growth of the business, regardless of the changes in the cash flow patterns.
Assemble and Organize all Your Financial Statements
Navigating complex financial statements might seem like a very easy task for some small businesses, but a majority of them tend to find it daunting. Therefore, every small business owner should ensure that they have an easily accessible record of all receipts, invoices, bills, and every other payment made with them before they begin with the new fiscal year. Hiring an accountant may come handy in case these businesses are unable to manage day-to-day finances over other operations. Moreover, in this digital era, there are an array of financial software and digital platforms available that small business owners can invest in and leverage for assistance with financial tasks like doing calculations and making financial reports.
Maintain a Real-Time Record of Outstanding Invoices
One of the most essential tasks for every small business owner is the maintenance of a real-time record of all invoices and consequently follows up on all the receivables that remain. There is no better time to track, gather, and settle outstanding invoices or unpaid bills than the beginning of a fiscal year. This practice would certainly help in starting the new financial year on the right note!
Evaluate Current Taxes and Devise Strategies Accordingly
While getting the taxes in order proves to be an exhausting task for businesses at the end of an oft-busy fiscal year, they can effectively utilize the beginning of a new financial year to cater to all their taxes from the preceding year and leverage benefits thus. Upon thorough evaluation of current taxes followed by consultation with the accountant or auditor, small business owners can decrease the upcoming tax clutter to a substantial extent by devising and implementing different tax strategies.
Set Business Goals and Action Plans for the Fiscal Year Ahead
After having adopted the business practices mentioned above, small business owners can finally invest not just their finances and resources but also their time and efforts in planning for the financial year ahead. Upon setting short-term business goals to accomplish in the new fiscal year, businesses can figure out their action plans accordingly. For instance, if the goal for the upcoming year is to upgrade the business infrastructure including the equipment, these small businesses can explore a vast range of readily-available business loans for the quicker achievement of the goals set. Moreover, business owners should always be well-equipped with an alternate plan of action to prepare themselves better for any unprecedented events ahead. Learning from similar situations that they may have faced in the past and having a Plan B accordingly can go a long way in ensuring better prospects. Therefore, planning well in advance and availing loans catering to their specific requirements will give these businesses the boost necessary for their growth.
Armed with these highly effective business practices, small businesses can prepare themselves better for the financial year ahead, starting it on a positive note. While all this analysis, organizing, and planning may initially seem like a time-consuming and exhausting process, the results yielded, later on, will certainly be worth the while. Therefore, adopting effective business practices for the upcoming financial year and charting out an action of plan accordingly will enable businesses to enjoy success and newer growth trajectories, as the year progresses!