New Year’s Day has come and gone, so how are you doing with your 2020 business resolutions? It’s common for individuals to set personal goals for the new year, but if you’re a business owner, it’s also important you set goals for the long-term success of your business.
These can be growth metrics like hiring new employees or launching new services, or they can relate to specific revenue numbers you’d like to hit to bring your business to the next level. Whatever your goals are, having the right financial strategies in mind, like the ones outlined below, can help you get a jump-start on success in the new year and beyond.
Be prepared for a change in the economy.
With the last U.S. recession over 10 years ago, many anticipate that the next economic downturn could be just around the corner. As business owners look to set fiscal goals in 2020, a key part of any successful strategy should be financially preparing for an eventual recession.
Some strategies for surviving a downturn are obvious, like diversifying revenue sources and making cautious investments. However, one consequence of a recession that is often overlooked is that financing will be more difficult to secure. The best time to seek financing is when you don’t need it, so even if you’re not looking to use extra capital just yet, 2020 could be a good time to consider a line of credit or other financing option, such as a merchant loan, just in case.
Identify the best type of credit for your business needs and goals.
All businesses need additional capital at some point, but it can be hard to identify what type is the best fit for you and your specific business needs. When it comes to business financing, no solution is one-size-fits-all, and there are several options to consider.
For example, businesses often need short-term access to capital fast. In this case, a business line of credit or invoice financing may be your best bet. These options allow you to cover expenses in the near term while you wait for long payment cycles and can solve short-term cash flow issues.
For one-time investments, a term loan could be a good option for you. With a term loan, you receive a lump sum of money that you can use for a specific project that will help grow your business over the long run. For example, if you have a goal in 2020 to open a new location, a term loan can give you the upfront capital you need to secure a site, buy equipment and hire new talent, all before the location begins bringing in revenue.
If you are a small business, a Small Business Administration loan is also worth considering. These loans are guaranteed by the SBA and can work for anything from one-time equipment costs or longer-term real estate investments.
Take stock of your banking services.
Chances are high that if you own a business, you use the same bank for both your personal and business accounts. While this makes sense from a convenience perspective, you might not be getting the services you need for your business account.
In the new year, take a closer look at what services you’re getting — and, perhaps more importantly, not getting — with your current bank. In addition, watch out for banking fees. Little things like monthly maintenance fees, overdraft fees and ATM fees can add up and take dollars away from the financial goals you’re able to achieve. If you identify aspects you’d like to change, you can then look for a banking option that meets your business’s specific needs.
Whether you have detailed goals for the next year or are just beginning to think through them, having financial strategies like these in mind will help you and your business be successful throughout 2020 and beyond.