Entrepreneurs and small-business owners have faced their fair share of challenges in 2021. Now as we look ahead to a new year, whatever your aspirations for the business are, strong financial management will be essential to supercharging your success.
Below are some ways to make your finances work harder for you in 2022.
Re-consider – and communicate – your pricing model
If you don’t follow a proven formula when determining pricing, now is the time to do so, to achieve sustainable business growth. Your pricing should account for fixed costs, which remain the same regardless of your sales, and variable costs, which change depending on the quantities you sell.
It is recommended that businesses increase their prices annually, in line with inflation rates. Communicating any price increases well in advance of the date they come into effect is essential here. When sharing this information, focus on how they will benefit from the increase, such as receiving a consistently high-quality product.
Overcome late payments and take control of cashflow
Improve your cashflow by looking to technology such as GoCardless to set direct debits up with clients on retainer. It eliminates the need for frequent invoicing and chasing up on payments, as amounts are automatically deducted from their account.
Likewise, integrating your accounting software with platforms such as PayPal and Stripe will speed up payment times due to the payment process being more convenient than a bank transfer, as will offering incentives for early payments, and fees for late ones.
Assess and reassess your overheads
Open up your forecast and look back at costs that were incurred throughout the year, to identify where they could be reduced. Bank fees and subscriptions, for example, can easily add up in a small business, yet also tend to be forgotten as the initial investment seems quite low.
Consult with your bank about their fees, and consider seeking out those which offer zero fees, unlimited transactions, and no minimum balance. On the subscription front, ask yourself if you really need them all, and if so, make a note to discuss how they could be claimed with your accountant at tax time.
Master your small-business marketing
You don’t need to invest thousands to get a return on marketing. User-generated content can be very powerful, so consider creating a Google My Business account and offering an incentive to customers who leave you a review. This will also enhance your business’s ranking in Google search.
Connecting with your local community and offering specials or discounts at certain times of the week or year, can increase business during quieter times while driving repeat custom, and there’s immense value in collaborating with like-minded businesses. You don’t need to outlay major costs here, in return for an invaluable increase in brand awareness.
Turn to user-friendly tech
The future is tech-based, so if you’re still performing finance-related tasks manually, I urge you to invest in accounting software. It’s what most clients expect now, and it’ll save you immense time and money, by eliminating the need to do things like manually create and chase invoices.
If you’re in industries like hospitality or retail, rostering software like Deputy allows you to better manage your staffing, meanwhile, project management systems such as ClickUp can help keep service-based businesses and teams accountable.
A new year signals a fresh start – a time to say sayonara to any bad business habits as they relate to your finances. Take these five tips on board, and you’ll be well on your way to enjoying a prosperous 2022!
