2020 was an undoubted roller coaster for all small businesses. Although we can’t control the 2021 economy, getting your organization’s finances in order will surely make for a more stable financial foundation amidst the Covid crisis. As a small business owner, you likely have many skills in entrepreneurship and selling a product or service. However, if managing financial affairs isn’t in your wheelhouse, accounting and bookkeeping can be especially challenging.
Here are our tips for getting your business finances organized this year!
1. Stick to a 2021/2022 Budget
Although having a budget seems like an obvious strategy for running a business, during a pandemic it is especially important to establish an updated strict budget and stick to it. The economic landscape has changed and your business may need to adapt or cut down on expenses to keep thriving or stay afloat. A tool such as Expensify can help track small business expenses. Employees scan receipts or add cash expenses from their mobile devices and easily upload them.
Using accounting software is also highly recommended to accurately determine company revenue, expenses and cash flow. Quickbooks is known as the gold standard although there are other rising competitors though. When shopping for bookkeeping software look for these features: invoicing, expense tracking, and client/vendor contact management; automation of billing and recurring payments, quote and estimate creation, tax preparation, multiple-user access, payroll processing, mobile access, and integration with programs such as point-of-sale software.
2. Switch to Online Accounting and Automated Bill Payments
Keeping up with the financial side of owning a small business can feel like a full-time job in itself. During the craziness of the pandemic, it can be especially a difficult time to keep bill payments on time and in order. Unfortunately, missed payments could easily lead to late fees and deterioration of business relationships. Profit-loss margins can be thin for small businesses and late fees could put you in the red at the end of the year. Staying on top of billing due dates will help ensure your credit stays healthy during the financial crisis. Prioritize bills before anything else. We also recommend setting up pre-authorized debit payments, so when things get stressful you don’t forget the important stuff. Smartphone reminders are also a great way to stay on track.
3. Pay Attention to Payroll and Make Difficult Changes if Necessary
No one wants to have to let go of an employee, especially during a difficult time in the economy. Although hard decisions may need to be made to save your small business, these are the initial steps you can take:
- First, consider what expenses you can cut before thinking about employee wages. If you were thinking about hiring new employees in 2021, ensure your business can definitely afford the expense as a long-term investment.
- Take a look at the government resources available to help pay for your employee wages during the hard months.
- Look at cutting hours and see if this is feasible for your business and would work for the employee as well.
- The final resort is to give an employee a temporary or permanent layoff. Sometimes you just need to make difficult decisions as a business owner though to keep going.
4. Prioritize What Makes the Most Money
Take a look at your sales and determine which products or services are giving you the best return then focus on those when ordering, promoting, and marketing. Financial spreadsheets can help you to determine these numbers. A tool such as Float can accurately measure your cash flow regularly. It also uses patterns in your data to provide future projections so you can better plan for the future.
5. Seek Out a Loan or Subsidy If You Need Help
Fortunately, for small businesses going through difficult times, there are currently many COVID-19 relief programs available in Canada. Take a look at what options are there for you to get you to help get through the hard months or years during the pandemic.
6. Make Sure You Have Small Business Insurance to Protect Your Assets
2021 will surely be an unpredictable year! While you are protecting your finances, limit any risk of unexpected issues. Business insurance is critical for the survival of any business but especially for small businesses that are more at risk due to limited financial resources.
For professional advice and support, our insurance advisors have an outstanding reputation for helping clients find the right policy for their distinct circumstances. Our dedicated team of Small Business Insurance advisors will help you protect your assets, save you money, and minimize disruption in the event of a claim. Contact us today!