Setting Up Your Small Business for Financial Success in 2024
As a small business owner, the start of a new year can be both exciting and challenging, especially when you are expecting lots of growth but also have some concerns as inflation slows down and you need more qualified team members. Luckily, with change comes opportunity, and the rewards can be significant for those willing to adapt and innovate. There are some simple actions small businesses can take to stay ahead of competitors and make 2024 their most prosperous year yet.
Embrace Technology Tools
AI continues to dominate the news, but at the small business level, these tools shake out into capabilities that can improve team member productivity while making it easier to increase a business’s online presence. Whether it is an AI-powered tool, a function in your business management software, or a simple download into a spreadsheet combined with an intern from a local college, using technology to track key performance indicators gives visibility into business trends. It is crucial to understand how customers find you, what it costs to get them into the “shop,” what things they buy and how profitable they are to your business. By analyzing sales patterns in real time, small businesses can prevent inventory issues and improve marketing activities by looking at the store or website traffic and customer feedback. Transitioning routine customer service tasks to websites or mobile apps and integrating bots to handle customer inquiries can improve business efficiency and profitability in the long run, even with a limited team.
Refine Business and Cash Flow Planning
Planning for variations in customer demand, and ensuring the business has both the capacity to deliver the products and services customers want and the working capital or cash the business needs to operate and grow, are vital to the success of any small business. Sometimes, it means prioritizing expenses and making sure cash will be available to pay bills, especially when the business is growing. Conducting periodic spending reviews is effective in determining whether past expenditures are still necessary, given changes in customer behavior or industry trends, and ensures every spend delivers value. Business leaders need predictable cash flow in the short term and savings or credit for new opportunities or more significant expenses that happen once or twice a year, like taxes.
Grow Profitability Products and Services
Understanding the profitability of individual products and services can grow both revenues and profits. Trapping cash in slow-moving inventory or offering low-margin services can harm a business by failing to provide sufficient base revenues to cover costs, which may not be apparent at first glance. Businesses can reveal necessary pricing adjustments or identify profitable offerings that warrant increased promotion and marketing efforts by conducting a deeper margin analysis that includes all associated costs, such as borrowing costs for inventory funding or employee benefits and insurance. Businesses should also evaluate current customer demand and preferences and not tie themselves to historical practices. Additionally, accurate data and measurements are the key to making good decisions. Many accounting software programs now provide access to key metrics, assuming the correct data is inputted, similar to various business management software applications that operate on store or bank registers.
Stay Informed and Adapt
The business world is constantly changing, and businesses can stay on top of market trends, regulatory changes, tax laws, and new technologies by joining business groups like the local chamber or industry-specific groups (many of these offer online discussion groups and webinars). The ability of business owners to adjust to shifting market conditions is a critical factor for success in a rapidly changing economy.
Ensure a Basic Level of Cybersecurity
With the increasing reliance on digital platforms, cybersecurity is paramount, especially for small businesses. To protect your company’s financial data from cyber threats, implement strong security measures, regularly update your systems, invest in good antivirus software and educate your team about cybersecurity best practices. Often, your equipment or software partners can assist with this. Some transaction services, like the Clover Point of Sale System, require this.
Invest in Your Team
Current small business surveys show businesses are busy hiring the qualified people they need to provide high-quality services. Another approach is to invest in developing existing team members, linking pay to learning new skills and tying them to the business with future bonuses or pay increases. While developing and keeping people might cost more in the short term, it enables businesses to capture growth opportunities and avoid the costs of recruiting and training new employees in the long run.
Small businesses are the key to driving the U.S. economy, and the actions business owners take to keep up or get ahead of the competition feel heroic. When you run a small business, the workload is consistently heavy, and during the past few years, many business owners and their families have been working more to fill in gaps in the businesses. Taking these simple actions to take advantage of new technologies, implementing more sophisticated approaches to planning for the business, and ensuring you have the resources and cash flow to capture growth will help businesses have their best year in 2024.