By Steve Cohen
When autumn rolls around it marks a new beginning as kids make their way back to school. This time of year is also one of the best times to get back to business basics and prepare for success in the upcoming year.
To help you, I worked with my team at Excelsior Growth Fund to put together this list of essential business items that you should review. Each of these is critical to small business success and updating and improving them today means that when 2019 rolls around, you’ll be all set for a strong year.
Four back-to-business basics to improve now:
- Your business plan
A business plan is a road map to success, but many small business owners simply stick theirs on the shelf, so to speak, and never revisit it to ensure they’re staying on track toward their goals. As a result, when businesses start to grow, entrepreneurs often get sidetracked by and lose sight of the original mission and vision they set for their companies.
When you refer to your plan often and update it at least annually, a good business plan can help you:
- see where and how you’re making progress toward your goals
- pinpoint barriers and ways to overcome them
- make important decisions that benefit the business
- keep business investments focused on profitability and growth
Review your plan frequently to identify priorities. Are you achieving your goals? Has your business pivoted to take advantage of opportunities (or avoid significant challenges) and if so, are those major changes reflected here? Did you take on unanticipated debt or add more staff than planned?
In addition, reviewing your business plan periodically and making needed updates will ensure it’s refreshed and ready to go when you need to present it to external stakeholders.
- Your personal credit score
Visit Annual Credit Report.com to order a free copy of your credit report from each of the three primary reporting agencies (Equifax, Experian and Transunion). This enables you to see the same specific information that lenders see about your credit history, although the reports don’t show your score. It’s important to check this because if there are errors, you’ll need to clear them up with the reporting agencies and creditors.
The availability of free, online and easy-to-use credit-score websites like Credit Karma and NerdWallet make it a breeze to check your score regularly, too. By doing so, you can easily see your strengths and weaknesses and get sound advice for ways to improve your score.
It’s important to know that checking your score or requesting your reports through these sites has no negative impact. With some sites, you can also elect to receive email notifications if there are any significant changes to your score or receive alerts to any account activities out of the ordinary, such as a new line of credit has being opened.
If you haven’t already signed up for at least one of these sites, make a point of doing so now. Then, set a goal that can be reached by the end of this year, like increasing your score by 10 points or clearing up incorrect information in your credit history. By the new year, you’ll be positioned to receive better rates from lenders and vendors.
- Your business’s bookkeeping
As the owner of your business, no one has more of an interest in or responsibility for your company’s financial well-being than you do. That’s why it’s critical to understand your business’s finances, even if you outsource your day-to-day bookkeeping.
Make sure you understand and review how the money comes in and where it goes. Software programs like QuickBooks® make it easy to track income and expenses, invoice customers, pay vendors and other bills and help you organize your finances for tax time. Using online software programs can also make it much easier for your accountant to find ways to help your business become more profitable and grow.
Be sure that you understand bookkeeping basics and how to set up a basic bookkeeping system, and take advantage of free small business resources from Excelsior Growth Fund when you’re ready to further hone your bookkeeping skills.
- Your business’s key financial documents
There are several documents that are important to your small business’s finances, but a few of them are truly essential to helping you understand its financial health. The balance sheet and the profit and loss statement (or P&L, as it’s commonly known), are among the most important.
Simply stated, your balance sheet shows all of your business’s assets (such as cash and property that you own) after you factor out your business liabilities (short- and long-term debts to creditors) and owner’s equity.
Another document that indicates your business’s financial health—and that most lenders require when making loan decisions—is the profit and loss statement. In a nutshell, it shows revenues and expenses over a specific time period. A P&L doesn’t have to be complicated to create. Many bookkeeping software systems can generate them in seconds.
Use the balance sheet and P&L to take stock of your business’s progress. Did you hit key revenue goals, and why or why not? Are your marketing strategies on track, and are your products or services and customers aligned? What can you do to recalibrate before the year’s end? What can you implement more effectively next year?
Fall is a slower time of year for most accountants, so as you’re sorting through your financial information also take some time to connect with your accountant to ask questions and get advice.
Get to work now and experience increased success in 2019!
Take advantage of the back-to-school vibe at this time of year to refresh your business basics. Preparing now—rather than waiting until the end of the year—gives you plenty of time to meet with key people (like your accountant and banker or lender), find and optimize new opportunities to grow your company, and take corrective actions when you identify weaknesses in your business plan, your credit score or your business’s bookkeeping and financials.
Together, these will lead to an organized year-end in 2018 and a great start to 2019.
Steve Cohen is the President of Excelsior Growth Fund.