January might not be the beginning of your financial year, but it might be a good time to plan your business for the year ahead.
In the UK Business and Insights report, it shows it’s the busiest month for entrepreneurs starting a business, with 63,000 incorporated in January last year.
And also says it’s the most popular month for planning. That could be because time off over Christmas and the slow start to the year offers the best chance to have a bit of space to think. Many of our clients see January as the start of giving their business a health check so they can plan for growth or new goods and services.
But where do you start when you want to plan your business for the year ahead?
Getting your finances in shape is always a good place to start. The cash that flows in and out of your business is what makes it a success, or a millstone around your neck! Either way, looking at where you are and where you want to be should be your starting point.
How to plan your business for the year ahead
With last year now consigned to history, you need to assess what went well and, just as importantly, what didn’t. You can learn from mistakes as much, if not more, than you can from successes.
Review your revenue, expenses and cash flow. They really do reveal a lot. Your numbers can highlight strengths you didn’t know you had. But, crucially, they can focus on where things need to be tightened up.
Your budget matters
Do you know what you’re budgeting for? Don’t just prepare a budget and leave it on your desk for the rest of the year, it should be a living document. As your business grows and shifts, so should your budget.
It’s worth refreshing your pricing, costs and expected income as the calendar year begins so you start the year with a realistic picture. You need to consider:
- Supplier or subscription increases
- Any changes in staff that are in the pipeline
- New services or projects being planned
- Changes to taxation or compliance that may increase costs from April
Even simple forecasting can help you plan for the year ahead, which can give you more peace of mind as you know what you’re facing.
Cash flow is your friend
We’ve mentioned before the importance of cash flow and cash flow forecasting. You can’t plan your business for the year ahead if you don’t understand your cash flow. It can make the difference between a difficult year and a good one. If your business is doing well, it is easy to take everything for granted, but don’t! It’s a perfect time to tidy up your invoicing process, adjust payment terms or for create a small reserve so your cash flow is positive. Doing it now means you won’t need to firefight during the spring or summer.
Don’t be taxed by tax
Planning your finances around tax doesn’t sound much fun, but it’s really smart. You can plan major purchases in a more tax-advantageous way and review your allowable expenses as well as the accuracy of payroll. It can all help save time and money later if you’re prepared. We can help our clients by:
- Making sure their records are tidy (small tweaks can prevent big headaches)
- Checking they are on the most tax-efficient structure
- Reviewing whether they should adjust salary/dividend mix as a company director
- Planning the timing of major equipment purchases to maximise allowance
- Confirming that payroll, pensions and VAT processes are all up to date
Even if nothing big changes, that reassurance can make the whole year feel lighter.
Review strategies and structure
It’s easy to get caught up and simply work, but what about working on your business? Taking advantage of the slower start to the year, you can take time to step back and review your business.
Is there an area where you think your business can improve? Does the current structure make sense compared to where you’re heading? Can you delegate any tasks? And ask yourself where you would like to be in 12 months’ time.
Reconsidering your direction can lead to a ‘light bulb’ moment that improves the direction of your company. And don’t forget that money matters, so compare your goal with the reality of your budget and cash flow forecast.
Take time for you
It is important not to run on empty because you can easily make mistakes. So plan your holidays now and set boundaries around admin time. Consider what you can outsource and put time aside to review your cash flow, budget and forecasts. Guard those times, too, because it’s important to stay focused throughout the year.
How can we help
Our team loves a cash flow forecast and our founder, Mark, is particularly keen on examining numbers to help your business grow. So if you want us to help you plan your business for the year ahead, contact us today for help.
