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5 Tips for managing your businesses finances in 2021

 

It was a year defined by Covid-19, self-isolation and the resulting global recession. A pandemic that brought the global economy to its knees.

But dozens of experts believe 2021 will be defined by the reopening of the Australian - if not global - economy.

Now is the time to look forward with confidence and start planning for a successful 2021.

It’s time to take advantage of what we have now and lay our plans to make the most of the year to come, and here are some tips to help you do just that.

Get an accurate read on your cashflow

Having cash reserves going into 2021 is really important. Having a healthy cash flow is vital in keeping your business afloat. 

When it comes to boosting your cash flow you make look at increasing the cost of products or services, decreasing staff, investing in marketing or putting forth a new service. Once you have figured out what is right for you and your business, implement your desired plan.

Financing equipment is also a great way to spread out the cost of acquiring an expensive new asset over time. Fixed repayments may help you plan your cash flow in advance.

The secret to a healthy cashflow is to accurately monitor expenses and receipts to maintain a flow of funds to finance ongoing work.

Have a flexible budget

If 2020 taught us anything about business, it’s that no budget survives contact with an unforeseen shock like a global pandemic and subsequent economic crisis.  

Your budget projections for 2021 should take a conservative and flexible approach, helping to prepare for whatever 2021 throws at you.

Although, it should accurately reflect what you expect in terms of income and expenses and line up with your long-term goals.

If 2020 was a difficult year, and especially if you had to dip into emergency savings, the goal of 2021 may be to rebuild. If that is the case, don’t hesitate to adjust your budget down.

Have a rainy-day fund

When the first shocks of the coronavirus were felt, it caused many business owners to drain their emergency funds.

Setting aside cash at the start of the year is a great way to ensure you have a healthy rainy-day fund; something you can draw from if you land on tough times.

Your emergency fund is something you can access right away, no matter the type of emergency. It allows you to keep operating, even if you don’t have instant access to other funds.

If it is viable for your business, 3 months’ worth of cash stored away is a good buffer just in case things don’t go the way that you expect them to go at the start of 2021.

Invest in business tools

Investing in areas of your business that will generate more funds down the line, is also a smart move.

There are plenty of business tools you can use to automate business processes–saving you money and time in the long run.

  • Accounting software automates bookkeeping and expense tracking and makes tax reporting a lot easier.
  • Email marketing software sends scheduled emails and tracks performance, boosting customer engagement while saving money on marketing.
  • If you have employees (especially ones who work from home), project management tools are essential to managing time and budget.

Investing in your business’ website capabilities is a great idea if you are utilising online sales more now then you were in previous years. High quality product photos and a reliable e-commerce site could be the difference between making a sale or not.

This may also be a good time to upgrade any business or office equipment. Investing in quality equipment can improve efficiency and save you money long term, all the while assisting to automate various tasks.

Set goals

One of the best things you can do is to set a specific and challenging goal for what you want to accomplish.

Setting a goal that may be difficult to reach encourages you to put more effort into reaching that goal and even if you don’t attain the goal completely, you are all but guaranteed to still come closer than you would have if you set a lower goal.

Take everything you learnt from this year, revaluate your current strategy, and focus on moving forward. 

Want to start 2021 with confidence? The team at Morris Finance can offer tailored financial solutions for new or used equipment or assist with boosting your cashflow putting you in control of your business’ finances. Contact one of our business specialists today on 03 5223 3453 to see how we can help you.