Small Business Enterprise - SBDC April 2022

Time to spring clean your business financials

Steps you can take to organize and grow your business

As you enter the spring season, and start doing your spring cleaning for your home, there’s no better time to also do some spring cleaning for your business finances. Thankfully, getting your finances organized and tidy doesn’t take a complete overhaul. Dedicating a few hours to tidying up and making some calculated decisions is all you need to achieve this goal.

Below are some easy tips on how to get your business finances in order.

Clean Up Your Books

With all your day-to-day business tasks as a small business owner, it’s easy to fall behind on your financial organization. To start your spring cleaning, you should gather your receipts, bills, invoices and bank statements. Then double-check all

your transactions to make sure they’re categorized appropriately between income and expenses. This will help you with your tax deductions and business planning later in the year. Once your transactions are categorized, create your financial statements: balance sheet, cash flow statement and profit and loss statement. With these you can discover any trends, opportunities and risks.

Having financial accounting software will make the above suggestions a lot easier. Bookkeeping software can help organize invoices, send payment reminders, generate financial statements and even categorize your expenses.

Track Your Cash Flow

When analyzing your financial reports, see where your money is going. Do you have too much inventory on hand? Should you hire seasonal employees instead of more full-time employees? Can you refinance your debt? Should you buy that new equipment or lease it? Answering questions like these can help not only save you money, but help you plan for your business future and next steps.

Possibly look at building up your cash reserve. Start by consistently saving small amounts. Maybe deduct a portion of every sale to start building your cash reserve, or maybe commit to a fixed amount each month. Building a cash reserve, “rainy-day fund,” may come in handy during a time when you really need it.

Also, don’t wait until your business is drowning to look for financing. Start doing your research now and securing the funding you need. Small business loans or a business line of credit can give your business access to cash that you can use to cover your business expenses or capital purchases.

Update Your Business Plan

This might be a great time to take a breath and look at your business plan. Where is the business currently headed? Is this where you want it to go? What steps do you need to take to get there?

Your business plan should be updated to help keep you on track with your goals, update these goals and plan the steps for achieving them.

Professional Services

If your business is growing, you may need to hire some help. If you feel overwhelmed, you don’t have to do it all alone. You can outsource an accountant to help clean up your books and keep your finances organized. They can analyze your financial statements and help you find any potential red flags, and also consult in building your business strategy. Maybe you’ve grown, but want to grow even more. Hiring a marketing professional can help you scale your business and reach new and wider customer bases.

Vince Chiarelli is a consultant with the Illinois Small Business Development Center at the Rockford Chamber of Commerce.