It’s almost 2018. As you look back on the year, what promises did you make yourself, your employees, and your customers?
- We’re finally going to track all our top metrics monthly.
- We are going to look at our budget more than once a year.
- I’m going to change sales incentives to better align with our target customers.
- We are going to surprise and delight our customers this year.
- We will re-evaluate all our marketing spend.
These are only a small fraction of the long list of things founders and managers are hoping for at the start of a new year. If you did in fact tackle all your 2017 resolutions, we are impressed. Most don’t.
Whether you’re a multi-million dollar company or solopreneur, we hear the same woes and challenges year after year. Time and money… Money and time. Like a broken record.
The thing is that time and money are really quite similar, in that sometimes you have to invest it to make more of it. Obviously, time is finite, but the idea is to invest time into creating efficiencies that save time going forward. That’s what we’re all about at Paro. Invest time now at the beginning of the year that will pay out many times forward over the course of the year. And invest money to create processes and habits that will make you more money in the long run.
So, how are you going to get your $h!t together for 2018?
1. Nail down your most critical KPIs and a process for reviewing them
Key performance indicators are the drivers of your business. They are the keys to your growth. If you’re killing it on all your KPIs, then your business should be killing it. If you’re not, you should be able to dig down and figure out why.
As your company grows, you have levels of KPIs: your company KPIs, specific departmental KPIs, and even team and individual KPIs.
The weird thing is you should WANT to review your KPIs constantly to see how your business is performing. And not just that gut-level review, but a real hard numbers review. And you should want to make your company-level KPIs crystal clear to all your employees so they can make sure their KPIs ladder up. Yet so many businesses fail to even define them.
We have a few articles that can help:
KPIs: 5 Critical Questions to Help Define Your Business Metrics
KPIs In Action: Get S.M.A.R.T. with Your Metrics
If you’re still having trouble sorting through the clutter to get to your core KPIs, sometimes a company outsider can provide much-needed perspective. Think about what it’s worth to you to know exactly what you should be tracking to grow your business in the quickest, most efficient way. If you realize how valuable that will be, we would love to work with you.
2. Compare your budget to your actuals every month
Sound horrendous? Don’t worry, we have several resources to help you:
Bolster Your Business Finances with a Financial Model!
How to Build a Basic Financial Model [Template Included]
How to Build a Financial Model: Budget Variance [Template Included]
How your Financial Model and Budget Work Together
If you know you’re going to download but never actually use these free tools, then reach out to our team for help. Our budgeting experts can create a custom budget for your business for a few thousand dollars, obviously less or more depending on the size and complexity of the business. We pride ourselves on being able to offer budgets and other financial models at a fraction of cost of the Big Four and other accounting and finance firms.
Using a budget like it’s meant to be used–to compare what you thought would happen with your business to what actually happened and iterate along the way– you should recoup that investment quickly. How? Because you’ll learn more about what is and isn’t working and be able to shift gears accordingly and quickly.
Here are a few examples of how our budgets have helped clients:
A girls lacrosse nonprofit used its budget to understand how much it needed to raise in donations to support all 2017 programs and staff. And, in pulling together the budget, we realized they were drastically overpaying their accounting firm, so we were able to reduce their monthly costs by $4,000 (that’s an annual savings of $48,000!). Now that’s a true win-win. Read the full case study here.
We worked with a food and beverage client to create their budget and made it part of the monthly reporting process to do a budget variance. Two months later in the monthly budget review, we realized their cost of goods sold (COGS) had increased 15% compared to budget and not because of production increases. It turns out one of their suppliers had raised prices without warning. Because they caught the issue early on, they were able to substitute ingredients and bring their margins back up quickly. Had they not done a monthly variance, their bottom line would have suffered badly.
3. Start preparing for tax season on Jan 2
Does that feel early to you? It shouldn’t. We recommend clients first get in touch with their tax professionals in October to see what they should be thinking about as they close out the year.
Here’s the rationale for getting on your taxes early:
- Tax preparers are less rushed early in the year, so you’ll get platinum treatment.
- You’ll pay less. Because your bookkeeper, accountant, and tax preparer have ample time to collaborate and exchange relevant information, you won’t run into having to pay the higher hourly rate of a tax preparer for tasks that your bookkeeper could have completed. You‘ll also avoid rush fees that can add up when you’re tackling things last minute.
- Decreased stress. Scrambling to get all your documentation together, reconcile months of financial data that was neglected, send 1099s, and do the myriad of other tasks required during tax season in the last week or two before filing can cause serious mental and bodily stress.
4. Outsource your finances to someone who will hold you accountable
Obviously, we hope Paro is that company. Our speed, quality, industry expertise, and cost are unparalleled.
Our finance experts have overhauled the financial processes for hundreds of companies to provide mid-market companies with consistent and better insight into their business. But the insight and the increased efficiencies, lower costs, and improved profitability are just the measurable metrics. What can’t be measured is the confidence our clients now have in their financial data, the stress we’ve removed from their shoulders, and the time they’ve gotten back to focus on other more important things.
We aren’t just a band-aid that comes in to fix your finances and then move on. We support you as your business and needs evolve and change. That’s the beauty of our model. You pay only for the services you need when you need them.
5. Thank your team, your clients, and your vendors
Good relationships are so important to running a great business, but we often take them for granted. Invest the time and some money into making your people–meaning your team, your clients, your contractors, and everyone else you work with–feel good. We’re all people but we don’t always treat each other that way, especially at work. We start thinking of people as their functions or deliverables or generally as objects that you can sub in and out. Don’t let yourself fall into that trap. Your thoughtfulness will go a long way.
And don’t forget: invest today and reap the benefits tomorrow. 2018, here we coooooome!