For many small businesses, 2019 has been a good year. The economy remains strong, and small business owners are relatively optimistic. However, despite successes, every small business owner should take time to assess what went right during the past 12 months and what can be done to improve things.
It’s important to know what is going on in your particular industry and your geographic location. Is there a construction boom? In areas where new residential units are rising, food businesses, transportation companies, and firms that offer convenient services have a lot of new opportunities for growth.
Small business owners need to take into account internal and external factors when planning for the coming year. They also must keep in mind that a New Year’s Resolution should be a year-long commitment, not a three-week trial in January before giving up. That means putting changes into place and committing to them for the coming year and beyond.
- Invest in Cyber Security Measures
Criminals are becoming ever more sophisticated, and it seems that on a weekly basis, some major company is announcing that their data systems have been breached. Banks and other financial institutions are investing millions of dollars to upgrade their security. For instance, my company launched a platform we call Biz2X that features the latest (SOC 2 compliant) security measures to prevent data breaches at companies that make small business loans.
Big institutions and technology firms aren’t the only ones that need to be concerned with online security. Every company should be taking proper measures to guard against cybercrime:
- Regularly back up your company’s data.
- Create a firewall that prevents outsiders from accessing your private network.
- Invest in the latest security software, web browser, and operating systems on your company’s computers. These measures are the best defenses against viruses, malware, and other online threats.
- Set antivirus software to scan regularly.
- Require employees to change their passwords every three months.
For more tips, visit the FCC’s small business cyber security page.
- Trim the Fat
Even the most successful companies have areas of their operations that can be streamlined. Labor costs are continually rising, with 21 states set to raise the minimum wage in 2020, according to PayCor, an HR and payroll technology company. California’s minimum wage goes from $12 to $13 an hour for companies with more than 26 employees in 2020. In New Jersey, the rate goes from $10 to $11 an hour. In New York City, the rate becomes $15 an hour on Dec. 31, 2019, while in Washington, DC, the $15 rate goes into effect on July 1, 2020.
Thus, overstaffing becomes more and more costly as time goes on. Be sure you have enough workers in peak periods, and monitor staff hours during slower times. For many companies, that means during the winter.
Review your vendor pricing. There is no harm in shopping around to see if you can find goods and services at better prices – assuming that the quality and delivery are comparable.
Use technology to cut costs. Are you still mailing out bills to your customers? Offer some type of discount or credit to customers who opt for email invoicing. Going paperless will reduce postage and staff costs.
- Reduce High Cost Debt
The Federal Reserve instituted three interest rate cuts during 2019, and rates are about as low as they can possibly be. If you have high interest debt, such as a credit card that charges 14% interest or more, figure out a way to pay it off sooner, rather than later.
Consider taking out a business line of credit, which now can be had at an interest rate as low as 5%. At a time when interest rates are so low, there is no reason to continue paying high rates, especially if your company is doing well enough to qualify for a low interest financial product.
- Pursue Your Growth Plans
When was the last time you expanded your business offerings? Perhaps it is time to introduce a new product or expand your services offerings. Look for ways of expanding your revenue streams from the customers you already have (organic growth), which can be much easier and less costly than acquiring new customers altogether.
If your company is doing well enough, perhaps it is time to examine opening another location. Choose an area where you won’t cannibalize your existing business but one that is fairly similar economically and demographically to the area where your company already is thriving. Be sure to write a business plan that will provide a road map for success. While you may have built a strong company already, there are likely things you would do now differently from the way you did things before. Mapping it out, will help prevent repeating mistakes.
Obtaining small business financing is comparatively easy today, compared to a decade ago. Fortunately, the small business lending environment that has been so pervasive for the past few years is likely to continue well into 2020. Interest rates are low, and competition between banks and non-bank lenders means there are many viable options for small business borrowers. Approval rates at big banks have never been higher during the post-recession era, and community and regional banks are approving more than half of the funding requests they receive, according to the most recent Biz2Credit Small Business Lending Index, which tracks business loan approvals and rejections.
New Year’s resolutions are devised to prompt improvements during the next 12 months. Set realistic goals. For instance, you might not be able to pay off $40,000 in debt this year, but you might be able to take measures to become more profitable and then be able pay off some portion of your high cost debt at a lower interest rate than you have now.
Prioritize your goals. If you need to increase your revenue stream to become more profitable, then making investments into expansion could be the optimum course of action. If high cost debt is the problem, take efforts to pay it off quickly. Reexamine your company’s financial situation regularly and look to improve profitability during the coming year.