Every year we make promises to ourselves, employees and customers. For example, you may have said you’re finally going to:
track key metrics monthly
look at budgets more than once a year
change sales incentives to better align with target customers
surprise and delight customers this year
re-evaluate all marketing spend
Sound familiar? This list is only a small fraction of the long list of things founders hope for during a new year. If you did, in fact, tackle all of your resolutions last year, we are impressed–most don’t.
Whether you’re running a multi-million dollar company or a micro-business, two similar challenges are faced year after year: time and money — money and time.
Time and money are quite similar; you have to invest it to make more of it. Obviously, time is finite, but the idea is to invest time creating efficiencies that will save time going forward. This is especially true at the beginning of each year. Invest time now that will pay out many times over the course of the year. Invest money to create systems and processes that will make you more money in the long run.
Identify KPIs and track them
Key performance indicators (KPIs) are the drivers of your business and key to your growth. As your company grows, you have various levels of KPIs: company KPIs, departmental KPIs, functional area KPIs and even team and individual KPIs.
For example, common sales KPIs include: CAC (cost to acquire a customer), Sales by month/week/year, Customer attrition rate (how often are customers leaving?), Average order/purchase value, Average monthly sales per customer, etc.
Review KPIs constantly to see how your business is performing — not just at a gut-level review, but a real, hard numbers review. So many businesses fail to even define KPIs. So, give yourself a leg up – live and grow by them.
Compare monthly budget to actuals
Use a budget like it’s meant to be used: compare what you thought would happen in business to what actually happened and iterate along the way. You’ll learn more about what is and isn’t working; and you’ll shift gears accordingly and quickly.
For example, a food and beverage client wanted to understand how they were tracking against their goals month-over-month, so we helped them build a budget variance. Two months into the monthly budget review, they realized their cost of goods sold (COGS) had increased 15 percent compared to budget (not because of production increases).
It turns out one of their suppliers had raised prices without warning. Because they caught the issue early on, they were able to substitute ingredients and bring their margins back up quickly. Had they not done a monthly variance, their bottom line would have suffered badly.
Start tax season prep on January 2
Does that feel early to you? It shouldn’t. We recommend clients first get in touch with their tax professionals in October to see what they should be thinking about as they close out the year.
Here’s why you should get started on taxes early:
Tax preparers are less rushed early in the year, so you’ll get platinum treatment.
You’ll pay less because your bookkeeper, accountant and tax preparer have ample time to collaborate and exchange relevant information, you won’t run into higher hourly rates of a tax preparer for tasks that your bookkeeper could have completed.
You‘ll avoid rush fees that can add up when you’re tackling things last minute.
You’ll decrease stress. Scrambling to get all your documentation together, reconcile months of financial data that was neglected, send 1099s and do the myriad of other tasks required during tax season in the last week or two before filing can cause serious mental and bodily stress.
Outsource finances and build accountability
The right finance team will work with you to identify your needs and proactively provide the information you need to make better business decisions. Increased insight and efficiencies, lower costs and improved profitability are only the measurable metrics a finance partner can provide.
The confidence you gain in your financial data, the weight that’s removed from your shoulders and the time you get back to focus on other more important things is less measurable but more important.
Build lasting relationship
Good relationships are so important in business, but we often take them for granted. Invest the time and some money into making your people — your team, clients, contractors and everyone else you work with — feel good.
We’re all people but we don’t always treat each other that way, especially at work. We start thinking of people as their functions, deliverables or generally as objects we you can sub in and out. Don’t fall into that trap. Kindness and empathy, like time and money well-spent, are two investments that pay back many times over.
This article has been edited.
Michael Burdick is CEO of Paro—outsourced finance and accounting for growing businesses. Paro empowers people to do what they love.