“It’s important that there’s some things happening on the financial side that are going to be setting you up for success as we move into the new year.”
Welcome to a brand new episode of the Cash Flow CFO Podcast. Join me on this solo episode as I share the crucial financial preparations that every business owner should be making as we approach the end of 2023 and look ahead to 2024. In this episode, I’ll guide you through two key steps to set yourself up for success in the new year.
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“A forecast and a budget should be considered kind of like an anchor in your financial plan.”
Step 1 – Getting a Clear Picture of Your Current Financial Situation
First and foremost, you need a clear picture of your current financial situation. This means ensuring your balance sheet is up to date and your profit and loss statement is cleaned up through the end of Q3. Having an accurate view of your financial position by December 31 is vital for strategic planning, profitability, and tax management. Collaborate with your bookkeeper to get everything in order and consult your tax strategist to make any necessary adjustments.
Step 2 – Creating a Financial Forecast and Budget
The second essential step is creating a financial forecast and budget for the upcoming year. Many business owners find this intimidating, but it’s like an anchor for your financial plan. Your business should be an asset that grows in value. Think of your forecast and budget as strategic tools to achieve your goals. It’s not just about crunching numbers; it’s setting the direction for your business, allowing you to be proactive rather than reactive.
Components of Your Financial Forecast and Budget
Your financial forecast should consider your current financial health, industry trends, and economic indicators. Revenue forecasting involves both science and art, using historical data, market trends, and customer behavior to make realistic projections. Expense management is critical, focusing on fixed and variable costs, and looking for cost reduction opportunities. Planning for capital expenditures, risk assessment, flexibility, and regular monitoring and adjustments are also key components to consider.
“Don’t think of this as we’re just crunching numbers. No, we’re setting the strategic direction for your business.”
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