7 Top Financial Tips for Small Businesses in 2022
If 2020 was the year many small businesses got knocked down, 2021 was the year many of them came back up off the mat. And to take the metaphor one step further, 2022 can be the year they go back on the attack.
And we have a few financial tips to help them do just that.
The financial side of the business is often one of the most ignored. Small business owners naturally spend a lot of time ideating new products and service improvements. Sales are a natural necessity given the core need to bring money in. And marketing has a creative appeal that gets many entrepreneurs engaged.
Managing cash flow or sniffing out tax breaks? Not so much. But you can’t run a business for very long if you can’t pay your bills or figure out how much to send to Uncle Sam. So positioning yourself for success in 2022 also means making sure you have the proper financial foundation that will allow you to execute on all of your growth goals.
Here, then, are a few pieces of advice as the calendar turns to a new year.
2022’s Top Financial Tips for Small Businesses
#1: Make a Budget … And Stick To It
One of the most cliché financial tips for small businesses is to create (and use) a budget…and for good reason.
Kicking off the new year with a freshly drawn budget is more than just a tone-setter. A budget is a blueprint for the next 12 months, outlining how you should spend money and what you can expect to bring in. A critical component of this is making an accurate revenue forecast; everything from your R&D spend to your profits flows from there.
Budgets also are useful when trying to raise funding. They can demonstrate to potential backers that you’re responsible with money and know how to plan.
Just as critical as making a budget is actually sticking to it. Yes, budgets shouldn’t be written in stone, and you might have to make changes through the year as reality warrants. But the closer you stick to budget, especially early on in the year, the less likely you’ll face nasty financial surprises later on.
#2: Keep an Eye on Cash Flow
Along the same lines, mind your cash flow.
A lot of business owners think about profitability as a primary goal, and they should. However, in a way, cash flow – how much cash flows in and out of the business – is even more important. That’s because a company that’s technically poised to be profitable across the year can still miss important vendor payments and default on loans if they don’t properly manage their cash flow.
Companies with heavily seasonal revenues are at particular risk here. They must plan carefully to ensure the cash from boom months lasts through thinner stretches of the calendar.
#3: Make Sure Your Invoices Get Paid
Did you know that at least a quarter of American microbusinesses have been waiting at least a year to get paid on at least one invoice? So if you’ve ever dealt with unpaid invoices, you’re not alone.
But you’d also best believe that, just like many other small businesses, you don’t have the financial wiggle room to keep getting stiffed. So one of the best financial tips we can offer up is to make sure your invoices get paid.
We provide several ideas to get invoices paid faster, including simplifying your invoices and facilitating automatic payments.
#4: Keep Going Paperless
Most companies large and small had to digitize some aspect of their business as the COVID pandemic spread. But while some businesses went full-bore into it, others dragged their feet, doing the bare minimum to get by while still clinging to their legacy systems.
One of our top financial tips for 2022, then, is if you merely tipped your toe in during COVID, it’s time to dive into the paperless pool. Digitizing your processes and records can save time, simplify your workload, make your reports more accurate and save you money. It’s a win-win-win-win.
#5: Remember: You Have Financial Needs, Too
Many small business owners do what they do because they had a dream they wanted to bring to life. An idea they wanted to turn into a tangible product. A group of people they wanted to help. Those are great reasons to be your own boss. But at the end of the day, you need to make sure you get paid, too.
Many small business owners will forgo paychecks for years, and struggle personally, just to keep their dreams afloat. That’s admirable. However, you can’t be an effective business leader if you’re not meeting your most basic needs – food, water, medical care, a roof over your head. So make sure you’re taking an income, and unless you want to work forever, save for your retirement, too.
#6: Keep Your Finances Separate From Your Company’s
Especially when you’re just starting out, it’s easy to treat your bank account like it’s also the company’s bank account. Bad idea. For one, commingling personal and business finances can cause massive headaches come tax time. You don’t want to confuse what you spent on yourself and what you spent on your company.
Even more critically, depending on your business structure, keeping your finances separated will keep you from being personally liable for any business failings.
#7: Don’t Go 2022 Alone
One of the best financial tips we can give any small business for the new year is to remember that, when it comes to your finances, you don’t have to be a solo act.
Hiring a professional, whether it’s just to do your taxes or run your company’s entire accounting operations, has a laundry list of benefits. Whether it’s providing accurate budgeting and forecasting, helping to navigate licensing and permitting, or just saving you money on your annual taxes, it pays to trust the pros. And those are all things that the accountants and other business experts at McManamon & Co. can provide for your small business in 2022.
Put your company in the pole position as we start the new year. Reach out to us at 440.892.8900 or contact us online today.
Tags: accounting, McManamon, McManamon & Co., small business, small business finances, small business taxes, taxes | Posted in McManamon & Co., paperless office, small business, Small business finances, small business taxes