Why Small Businesses Need to Take Stock of Financial Health in New Year
A whopping 94% of small business owners now believe that they could have managed their business much better through better financial planning. Source: Intuit commissioned White Paper This new financial year of 2015-2016, it has become imperative for all small businesses to concentrate on their financial management. A comprehensive financial management plan can be the basis of a sound financial health for all businesses. Many startups die within first three years of business and its been attributed to poor financial management. It’s time businesses start realising that good financial health does play a key role in keeping them solvent. India is the cradle of small business entities. In fact our country has the second largest number of small businesses on the planet (Source: Intuit commissioned Financial Management White Paper: An Essential Tool for a Healthy Business). As we continue to be a nation of small organizations and startups, the founders of these businesses are often driven and eager to experiment with new ideas, pioneering products and unique business models. Initial victories give small business owners confidence in their existing systems and tools. So your first year in business, or even the first fiscal year may be a good point to start on your financial management. Why Look Back At Your Financials? The financial year may be a good time for small businesses to take a look at existing financials and draft new financial resolutions for the New Year. Here are three reasons why financial resolutions are good for your company finances:
- Keeping the Company on Track
For every new business that starts off, first three years are often crucial for their financial management. While small businesses tend to concentrate on the business idea implementation during this time, financial management takes a back seat. Looking back, taking stock and forming a New Year resolution can work wonders in keeping the company on track during the formative years. The start of a financial year is the perfect time for companies to assess their systems and tools in place for financial management and put in place a financial management system to check their company’s financial health.
- Making Resolutions May Improve Your Financial Condition
A recent study by Fidelity suggests that making financial New Year resolutions can be very good for the company, even if these are not fully realised. Partial realisation of financial resolutions also can affect the company finances much more than no resolution at all.
- Motivating Yourself
Taking a look back at your last financial year and then regrouping to decide on your financial goals for a new year can be hugely motivating for everyone in your organization. New goals motivate ourselves a lot, and sharing goals with our colleagues and team members often help us keep going. So this financial year, take a step to manage your finances, before it is too late. Tell us, when did you make your last financial New Year resolution? The white paper, commissioned by Intuit India reveals essential data on financial management trends and practices amongst small business in India. “Financial Management – An Essential Tool for a Healthy Business,” represents data collected via qualitative and quantitative interviews with 350 Indian small businesses. The small businesses researched have a full-time employee strength ranging from one to 99 and an annual revenue falling in the range of less than INR 60 crores. Read our Financial Management blog series here: Why Small Businesses Need to Start Financial Management Early On Incorporating Technology for Smart Business Why Your Financial Strategy is Essential for Your Business Source: Intuit India Fidelity Investments