2018 is over and it's time to gather all of your financial statements, tie them up with a pretty bow, and hand them over to your tax preparer.
Unless, of course, you didn't keep up with your books last year; in which case, you're probably frantically trying to enter transactions, track down receipts and invoices, and comb through bank statements in a frenzy because your numbers just aren't adding up.
Which of these people would you rather be?
Person A: The one who spends 15-20 minutes gathering your financial reports and statements to comfortably hand off to your tax preparer
OR
Person B: The one who’s staying up way too late on weeknights and spending a big chunk of the weekend adding up receipts and deposits over and over again?
If your answer is Person A, you’re right! And, even though it’s too late for 2018 the time is perfect for you to become Person A in 2019 and all future years!
Here are 6 things you can start doing right now!
Get rid of the shoebox
Keeping your receipts in a shoebox is something that many entrepreneurs and small business people do – even if they don’t admit it. It may not be a shoebox, exactly, but the image of crumpled receipts stuffed away resonates with a lot of small business owners and professional service providers.
We’ve all been told that keeping receipts is important, and I’m so glad when people take that to heart. But with all the amazing technology available today, why on earth are you using a shoebox? Or a shopping bag? Or a file cabinet drawer?
You have a tiny, magical box in your purse or pocket that takes pictures. Use it to its full advantage! There are tons of apps out there designed specifically for keeping your receipts completely organized. Wouldn’t you rather snap a picture, then just throw the receipt away? It’s a much better use of your time.
Set Cost-Savings Goals
Revenue is wonderful, but if expenses are out of control you may never see a cent of profit.
One of my favorite tools are “Cost-Savings Goals”. Set up a goal for you and/or your employees to find ways to reduce expenses every year.
There are lot of ways to reduce an expense – find a less expensive supplier, negotiate with a current supplier, assess all expenses and remove at least one of them, or find a more efficient way to complete an everyday task, such as organizing receipts. (See #1)
When you hit a cost-savings goal, give yourself and your employees (if they were involved) a bonus! You’ve saved your company some money and you can celebrate by gifting a portion of that money to all who helped save it.
This is a great way to incentivize your employees or yourself. Either way, you’re the winner!
Regularly Re-evaluate Pricing
It’s important to review your pricing periodically, preferably quarterly, but never go more than a year without an evaluation. Your pricing of your products or services should be based on the real, current costs that you incur to deliver them to your customers.
As your business grows and changes, it may turn out that you are under or over charging. Without reviewing your costs, you would never know. Or won’t know until it’s too late.
It can be uncomfortable to raise your prices, but it will be a lot worse to find out down the road that undercharging led to not being able to earn a profit or pay your bills.
The best way to start is by reviewing your Statement of Cash Flows; more information about this report can be found here and here.
In addition to your Income Statement, (the Statement of Profit and Loss) your Statement of Cash Flows will help you really nail down your costs of doing business to determine your true costs.
From there, determining your prices is just a matter of adding in the profit percentage you want to make. For example, if your true costs of one of your products is $75.00 and you want to be operating at a 30% profit margin, add 30% to $75.00. Now you know that your price to your customers [its actual cost] for that product should be $97.50.
Prioritize Your Time
Business owners wear a lot of hats, and tend to be spread pretty thin. Once you add in personal responsibilities, you’ll find that your time is incredibly valuable. If you’re finding that there just isn’t enough time in the day to get everything done, then it’s time to reset your priorities.
Schedule some time to sit down alone and list your top 5-10 priorities. This should include both personal and business priorities and can range from spending time with your family, to creating a marketing campaign, client prospecting, or cleaning out a closet.
Your list will be unique to you, but the importance and impact of this activity is applicable to every small business owner/entrepreneur.
As Laura Vanderkam, bestselling author and time-management expert, said:
Instead of saying "I don't have time" try saying "it's not a priority," and see how that feels. Often, that's a perfectly adequate explanation. I have time to iron my sheets, I just don't want to. But other things are harder.
Try it: "I'm not going to edit your résumé, sweetie, because it's not a priority." "I don't go to the doctor because my health is not a priority."
If these phrases don't sit well, that's the point. Changing our language reminds us that time is a choice. If we don't like how we're spending an hour, we can choose differently.
I couldn’t have said it better myself.
Hire a Professional
Once you’ve completed the prioritizing task above, see if there are any logical, financially feasible options for outsourcing one or two of your most important business priorities that are most challenging for you to accomplish.
Being a business owner often implies you’re a “a jack of all trades”, which also implies “master of none”. And while we know you definitely have mastery over the core operations of your business, you don’t have mastery – or the time to gain mastery - over all aspects of running a business.
This means it’s very likely that someone else is better suited to perform certain tasks and responsibilities.
The proliferation of virtual, remote workers greatly increases the odds that you can find an ideal professional for any position or specialization within your company.
You can contract service providers and hire remote employees or independent contractors anywhere in the world. This means you can find an expert that understands your vision and can become a service-providing partner in your entrepreneurial journey.
Hiring an expert to handle the tasks you can’t or don’t want to do will free up your time to focus on your strong suits, the things you’re most passionate about that propelled you to start your business in the first place.
Conduct an honest self-assessment
Sometimes the only thing standing in the way of change is you! However, it can be incredibly difficult to recognize your weaknesses and shortcomings as a business owner and manager.
Your first step is to be honest with yourself. Our brains are hardwired to blame others or outside influences for our setbacks and failures. It’s easy to say, “I’d be better at this if it wasn’t for [some vaguely related thing].”
The ability to see yourself candidly – and as others see you – is enriching and empowering. This doesn’t mean that you have to be harshly critical of yourself; it means stepping outside of yourself and taking an objective assessment of your strengths and your weaknesses.
For example, I recognize that I often procrastinate, and that I’m AMAZING at justifying that procrastination. The point here isn’t to shame myself for this trait, it’s to acknowledge the characteristic, recognize when it’s happening, and take steps to prevent it.
It’s a lot easier to get yourself to do something, than to stop doing something. The best way to help yourself do and be better is to recognize what you struggle with, then figure out the smartest, easiest way to minimize the struggle while still getting the task done.
I want to say this again because it’s one of my key mottoes:
You have to set yourself up for success!
Bottom line
The only person who can make you better is you. Taking even a couple of these steps will accelerate your success and help you reach the highest goals you set for yourself and your business.
Here’s an example of how doing just 1 of the above steps can lead to naturally engaging in 2 other steps with astounding results such as alleviating some stress, freeing up some of your time and energy, and getting a grip on your overall financial picture.
Let’s say you’re a web developer who, after reading this article, decided to do the time-prioritizing activity (# 1) and discovered that bookkeeping is a priority.
After an honest self-assessment (# 2), you acknowledge that bookkeeping is a skill set that’s not in your natural wheelhouse. In fact, you admit that you avoid doing it and when you do give your books some attention, you rush through it.
So, you reach out to Still Waters Bookkeeping and after a couple conversations, you hire Still Waters (Step 3) to take this vital responsibility out of your hands and off your schedule. And now you’ve got more time and energy to focus on growing your business.
It really can be that easy!