By Fred Castrovinci, FSVP-Regional President Business Banking – New Jersey and New York, Valley Bank
As we approach the end of the year, it’s time for business owners and senior executives to start planning for 2024 – and it’s best to begin by understanding how your company performed in 2023. This honest self-reflection will help you make informed decisions for the future.
Three steps you should consider:
- Review your sales and financial goals. Conduct a deep dive to evaluate year-to-date sales and whether you achieved the targeted financial goals. If you are not going to hit those targets, discuss what led to the miss; were those goals realistic or too aggressive? Examine what could have been done differently and look for things you can change in the last quarter to close the gap. If you are on track to meet those goals, celebrate this victory!
- Review your time spent on people. Do you have the right leadership team by your side? Are they in the roles best suited for their skillsets? How is staff turnover and morale? What is communication like from top leadership, and how is engagement across the entire business? These questions are all connected to how aligned your managers and employees are with the business strategy.
- Evaluate your partners and advisors. Do you have solid and trusted relationships with your CPA, attorney, insurance broker, and bank? They should have a thorough understanding of your business and your goals, and meet with you regularly to identify potential problems and find solutions. Remember: it is okay to ask for help and guidance from subject matter experts – that’s what they’re there for. If you want to make changes to your partnerships in the new year, now is the time to start that process. Reach out to people in your network for recommendations and referrals.
Once you have reviewed this year with your team, it’s time to start planning for 2024.
Here are four best practices:
- Invest in your People and Culture. The best strategies, regardless of your revenue size, can fail from a lack of organizational trust, clear communication, and collaboration. Giving your employees a voice and allowing them to help shape next year’s strategy will naturally create alignment and sense of ownership for all. While quarterly or annual incentives can help reinforce the right behaviors, they pale in comparison to the power of frequent recognition and internal promotions. Don’t be afraid to realign leaders to more effective roles for their skillsets and empower them. By focusing on the things that only you can do, you will generate the highest impact. It’s also important to invest in professional development at all levels. This can be done through mentoring, monthly coaching sessions, leadership programs from outside experts, and giving all team members direct access to senior leadership.
- Increase efficiency. Do you have multiple banking relationships and too many accounts because it “just happened like that as we grew,” you “don’t want all your eggs in one basket,” or “changing would be too much work”? Consolidating your daily banking activity to one institution can improve efficiency and be done without additional risk. Having a relationship team at your bank can make this easy and there are products to give more FDIC insurance than standard levels.
- Prioritize cash flow, and safeguard your business
Improving cash flow is vital for any business to thrive and grow. Making sure that your invoices are accurate, promptly sent, and followed up on can significantly impact your cash flow. Additionally, offering incentives for early payments or implementing flexible payment methods like ACH and credit card can encourage clients to settle their dues promptly. Regarding your own payables, making vendor payments with certain cards could create additional float time and yield cash-back rewards. Careful cash flow management also involves forecasting and managing expenses wisely, identifying areas where costs can be reduced without compromising quality.
It’s equally important to consider fraud prevention measures to safeguard your business. Fraud can cause substantial financial losses, damage the reputation of your company, and erode the trust of your clients and stakeholders. Implementing robust fraud prevention systems and procedures can help minimize such risks. These may include regularly monitoring financial transactions with the help of your bank, adopting secure payment gateways, and implementing strong internal controls.
- Make financial adjustments. Higher interest rates have presented challenges for businesses looking to borrow. On the flip side, the higher rates are beneficial for those with surplus cash. Talk with your trusted banking and financial team about where and how to take advantage of the rates. Review tax records and discuss adjusting with your CPA before the year ends. This is where it’s important to rely on your financial advisors for guidance.
No one can predict what the future brings, but if you invest the time and effort into evaluating and planning, you are creating a greater opportunity for long-term success.
