As you get ready for the second quarter of 2022 it’s essential to take the time to reflect and strategically plan for the months ahead. All too often, we use the beginning of the calendar year to set financial goals, only to ignore them until the end of the year. Reviewing and tracking your financial plans on a consistent basis will set your small business up for financial success!
In this post, we’ll guide you through some small business financial planning advice so you can head into Q2 with clarity and confidence.
We recommend tracking how you spend your time every day for at least a week. It’s important to know how you’re spending your time as a business owner. Are you delegating where you should be? Do you need to make a strategic hire to save you time? Should you consider automating specific tasks?
Once you’re conscious of where your time is spent, you can work to make the most value out of your time. Time tracking is an important piece of financial planning. Time is money–especially as a small business owner who wears many hats at once.
Deciding to outsource or invest in software to automate tasks might seem like just an expense at first. However, what matters most is the long-term financial impact and potential growth. Hiring a social media manager costs money, but maybe they help you book more discovery calls and save you time so you can actually take on that new client? Purchasing a system like Dubsado or Honeybook could cost a few hundred dollars each year, but it may be worth the investment if you save a few hours each week.
Pro tip: We also recommend noting what tasks drain your energy vs. give you energy. Try outsourcing or automating the tasks that drain your energy to save you from burnout.
If you set financial or sales goals at the start of 2022, take time to review your progress. Ideally, you should be a quarter of the way to meeting your end-of-year goals right now!
Evaluate your target metrics– are you ahead or behind your Q1 financial goals?
Here are a few things to consider if you’re behind:
On the flip side, if you’re ahead of your financial goals–congratulations!
Consider adjusting your end-of-year revenue goals to reflect the strides you made in Q1. If surpassing your pre-set financial goals means you’re adding more work to your plate, it might be time to hire. Read on to learn more about hiring and strategic investments.
Investment planning is a crucial part of financial planning that is too often overlooked. Making strategic, thoughtful, and calculated hires will set your business up for sustainable long-term growth.
This includes hiring coaches or consultants, investing in quality team members, continuing education courses, and more. Where and how you invest your money back into your business impacts your revenue goals, profit margins, time, and energy!
When you think about investing in a new hire, a project, a coach, or a consultant, we recommend prioritizing the return on investment (ROI). ROI is key to sustainable financial planning because it helps you see how your investment will pay off over time. Even though hiring might lower your revenue this month, think about what the hire will do for your business in the months ahead. For long-term investments (like team members, year-long coaching programs, etc.) make sure you consider the impact on your profit margins and cash flow as well.
As you can see, there are plenty of ways to use financial planning to your advantage. As a small business, it’s important to know your numbers every month, quarter, etc. not just every tax season.
According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have failed. This generally comes from a lack of financial planning and proper management of cash flow. Every quarter, evaluating your financial health will set your business up for long-term success.
We recently launched the Business Backpack–a resource and template shop to help you take the next step in building your business. One of our favorite resources inside the Business Backpack is for financial planning.
We created an in-depth spreadsheet to help you with your monthly and annual financial projections. You can view your projected cash flow throughout the year, plan expenses, and strategize your investments, all in this financial planning spreadsheet.
If you need more in-depth and hands-on support with financial planning for your business, our VIP Day could be the solution for you.