A New Year’s Resolution for Your Business: Financial Health
Written by Todd Gregory, President & CEO of 1st State Bank
As we enter a new year, it’s a natural time for reflection and goal setting. Just as we often resolve to improve our personal well-being, it’s equally essential to consider the financial health of our businesses. Here are some straightforward, effective resolutions to help keep your business financially strong in the year ahead.
Strengthen Your Cash Flow Management
A steady cash flow is the backbone of any healthy business. Even profitable businesses can struggle if they’re low on liquidity. Review your cash flow forecast regularly to understand your income and expenses. If you notice trends of seasonal dips, work on strategies to mitigate these, such as adjusting inventory levels, renegotiating payment terms with suppliers, or securing a line of credit to manage leaner months without disruption.
Optimize Expenses
Operating efficiently doesn’t mean cutting corners; it means maximizing value from every dollar. Start by reviewing your largest expenses. Are there services you’re paying for but not using to their full potential? Could renegotiating supplier contracts bring down costs? Take time to evaluate whether each expense drives value or if you can reallocate funds toward higher-impact investments.
Build Cash Reserves
One of the most powerful ways to strengthen financial resilience is to have a cash reserve, ideally covering at least three to six months of operating expenses. This “rainy day” fund can be a lifesaver during unforeseen disruptions or economic downturns. Set aside a percentage of your monthly profits toward this reserve and make it a non-negotiable commitment.
Invest in Financial Literacy and Planning
If you find financial statements overwhelming, make this the year to improve your financial literacy or hire a professional who can help translate your numbers into insights. Throughout the Great Lakes Bay Region there are many resources offer workshops, or consultations specifically designed to help business owners gain confidence in understanding their finances. Better insight into your business’s financial health allows for smarter decision-making and more robust growth.
Explore Revenue Diversification
Relying on a single product, service, or customer segment can make a business vulnerable to economic shifts. Look for ways to diversify revenue streams by adding complementary products, expanding into new markets, or creating tiered service levels that appeal to a broader customer base.
A new year brings a fresh start and the chance to make meaningful improvements. By setting these financial goals, you can keep your business adaptable and prepared for whatever challenges or opportunities the future may bring. Financial health isn’t achieved overnight, but with consistent effort and a few strategic adjustments, your business can start 2025 on a path toward sustainable success.
Reduce Likelihood of Fraud
Review your bank account activity daily to look for any irregular or unrecognized withdrawals or deposits. Monthly bank statements should be carefully examined to reduce the likelihood of fraud on your account. It is good practice to set up alerts in your on-line banking profile as well.