4 financial resolutions for small business owners in 2021

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4 financial resolutions for small business owners in 2021

The beginning of the new year is a good time to take a step back and figure out how to keep the financial situation of small businesses in order. Due to the uncertainty in 2020, this maxim will be more applicable in 2021.

When you start to make financial decisions for the new year, it is important to strike a balance between short-term and long-term financial goals.

What are examples of short-term financial goals?

As the name suggests, short-term financial goals are what you hope to achieve in the near future—for example, within 6 or 12 months.

For example, if you are one of 50% of companies There is only a cash buffer that allows you to open the door for 27 days, You may wish to set short-term goals for increasing your cash reserves.

In this way, you can better cope with some of the unforeseen outages that many small businesses will encounter in 2020.

How do you set long-term financial goals?

On the other hand, long-term financial goals are what you hope to achieve at some point in the future-five years, ten years, twenty years, or even longer.

One of the most common long-term financial goals for small business owners is to ensure that you have enough money to retire comfortably. Unfortunately, 21% of Americans Don’t put any Their income is used for retirement planning, and 64% They lack the funds they need to lead a comfortable life in their golden years.

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As a small business owner, you have more retirement options than ordinary professionals.For this, you may want to consider creating a Irish Republican Army Or a separate 401(k) plan for 2021 to achieve your long-term financial goals for a comfortable retirement.

The good news is-by developing financial solutions and sticking to them-it is possible to achieve your short- and long-term financial goals. This may take some time and some sacrifices. But as long as you have patience and determination, it is possible to optimize your small business’s cash position and unknowingly end up with a stronger financial position.

When you start planning for 2021, one thing to remember is-although financial decisions are easy to make-they can also be broken; many people tend to Break their determination anywayNonetheless, simply taking the time to come up with a solution is a worthwhile exercise and can start to get you thinking in the right direction.

With all of this in mind, let’s take a look at four financial resolutions you should consider for small businesses as we enter the new year.

1. View and optimize your monthly budget

Believe it or not, 61% of small businesses There is no written budget of any kind.

This may not matter when you are a one-person team and have good control over your finances. However, once your small business starts to expand, you should seriously consider setting a monthly budget and tracking cash outflows. This will not only give you a clearer picture of your financial situation at any given time, it will also improve your cash flow and help you identify areas where you can save money.

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If you don’t know where to start, you can’t improve your company’s consumption habits. By reviewing your expenditures on a monthly basis, you can identify areas that need to be optimized, better control your finances in a relatively short period of time, and measure your progress.

2. Repay high-interest credit card debt

Although there are such things as “good debt,” high-interest commercial credit card debt is definitely not.

However according to one Recent studies, Almost a quarter of small businesses have a credit card balance every month. More importantly, 50% of people said they hold balances from time to time. If you contribute to any of these numbers, you should make every effort to settle the balance in full as quickly as possible. Otherwise, you are just burning money.

Not only are credit card interest rates prohibitively high, when you only pay the minimum monthly payment, you end up paying interest. Depending on how high your balance is, it may lead to a spiraling debt, and in the best case it is difficult to get rid of this situation.

Once you have paid off your commercial credit card debt, get in the habit of paying off the balance in full Every month. Use a credit card for convenience and to take advantage of bonus points—not to plunge yourself into huge debts.

3. Guarantee flexible financing

If you are a small business owner whose goal is to end with a healthier financial situation next year, you should consider obtaining a flexible source of financing that will allow you to quickly obtain the cash needed for growth. It defeats alternatives that accumulate high-interest debt or encounter cash flow problems without knowing what to do next.

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For example, you can apply for a credit limit Online and borrow from them as needed, and only pay interest on the funds you withdraw. Keep in mind that obtaining a commercial credit line does not always require a lengthy application process.learn How to apply for a Fundbox credit line Only two simple steps are required, and if approved, funds can be obtained quickly.

4. Invest in your future

This is a resolution that combines short-term and long-term financial goals: invest more money in the company’s future.

The short-term goal may be to invest in new tools and technologies to increase productivity. For example, if you are still using spreadsheets or worse to manage your accounting, you may want to check out accounting solutions such as Quickbooks, FreshBooks, or Xero. This not only allows you to better control your financial situation, you can also recoup time and reinvest it in other areas of operation.

Over time, you may find that simple investments like this give you enough time to develop new products, target new customers, or create more persuasive marketing campaigns-all of which can help increase your profits .

What is your financial resolution for 2021?

Make some financial decisions and stick to it, and it will be much easier for your small business to end in a more favorable position than it started next year.

The above list is not complete; you can make hundreds of financial resolutions for the upcoming year. Nevertheless, it should give you some ideas as a starting point.

This is to make smart financial decisions that will enable you to help your business achieve its goals for next year and beyond.

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