As the year draws to a close, small businesses face the crucial task of year-end planning.
Now is an ideal time to evaluate your company’s financial health, refine your business’ strategies, and set the stage for a successful year ahead.
Here are ways small businesses can strengthen their foundation heading into 2025.
Perform a Full Financial Checkup
Businesses should always monitor their finances and cash flow, but the end of the year can serve as a great opportunity to take a deep dive and look for areas you can improve upon in the future.
Take a close look at financial statements, your balance sheet, income and cash flow to identify trends like increased expenses or decreased revenue that should be addressed. While interest rates and inflation have begun to cool, many businesses saw their costs increase in recent years, so it is important to continue to evaluate your finances and look for areas to improve.
If you’re not already, consider leveraging expense management systems, which can provide real-time insights to help you quickly make strategic decisions in the future.
Optimize Your Cash Flow
Cash flow management is vital for any small business. Evaluate your cash flow to ensure that your business can meet its financial obligations and invest in future opportunities.
Create a cash flow forecast for the upcoming year to anticipate potential shortfalls. Continuous analysis of your cash flow throughout the year can enable you to be proactive and make informed decisions about expenses, investments, and savings, ensuring your business is well-prepared for both expected and unexpected challenges.
By regularly evaluating your cash flow, you can also ensure you maintain appropriate reserves, identify opportunities for cost reductions like negotiating better terms with suppliers, ways to improve working capital efficiency, and more.
Set Goals for the Year Ahead
As you plan for 2025, set goals that are specific, measurable, achievable, relevant, and time-bound (SMART) to keep you on track.
Whether you’re looking to increase revenue or reduce costs by a certain percentage, or even expanding into additional locations, having clear objectives will guide your business decisions and keep you focused on growth. Break down your business’ goals into actionable steps and assign responsibilities to your employees to ensure accountability within your team.
Once your goals are set, allocate resources appropriately to ensure they are aligned with your objectives. Look to invest in areas that offer the greatest potential for growth or return on investment (ROI), such as technology and facility upgrades, or even marketing efforts. Make sure you regularly revisit your plan throughout the year to adapt to changing market conditions and to capitalize on new opportunities.
Evaluate Capital Needs and Borrowing Options
Many businesses paused reinvestment opportunities in recent years due to elevated interest rates. With rates beginning to decline, now could be a good time to revisit ways you can reinvest in your company, such as purchasing your real estate, upgrading equipment, or investing in your employees’ benefits and success.
Among just a few options to finance those investments without straining your cash flow or dipping into reserves are working capital lines of credit, real estate or equipment financing loans, and small business administration (SBA) loans.
While the economy is showing signs of improvement, it still presents challenges for many businesses, underscoring the importance of having a solid plan in place heading into 2025. Speak with your trusted business advisers, like your banker, accountant, and attorney before the end of the year about strategies that could strengthen your business and work together to put a well-rounded plan in place.
Jeremy Shackleford is Senior Vice President, Director of Small Business Sales for WSFS Bank. He joined WSFS in 2018 after 22 years working in banking and financial services, and was most recently Senior Vice President, Regional Manager for WSFS’ Greater Philadelphia Market, where he oversaw 15 Retail Office locations. He also served 10 years as a member of the United States Air Force.
