As we start a new year, it’s common for people to set a goal to become physically fit. But have you considered similar goals to keep your business financially fit?
It takes consistent effort to stay physically healthy and the principle is the same for the health of your business. If you want your business to succeed, you need to implement strategies to help your business stay in good health.
Here are 10 ways to build financial strength for your business.
1. Review basic financial figures that indicate the health of your business
These figures include revenue, expenses, overhead, assets, equity and liabilities. If you understand these numbers, it will be easier to assess the financial health of your business and what you should focus on.
2. Evaluate your billing practices and confirm they are consistent and timely
It’s important to have a formal system to create invoices and complete the billing process seamlessly. If there’s friction in any of your processes, it will harm your cashflow and overall financial health of your business.
3. Optimize bookkeeping
To help you make smart financial decisions, you need a reliable way to track incoming and outgoing funds for your business. If bookkeeping isn’t a strong skill set, consider hiring a CFO or outsourcing this function.
4. Conduct an audit of your accounts receivables and inventory
If you have a significant number of overdue invoices, make collection efforts a priority. It might be helpful to offer a discount on early payments or develop a stricter credit policy.
For inventory, analyze your stock level so you can avoid overstocking or stockouts. If some items are slow-moving, look for ways to repurpose or liquidate them.
5. Evaluate pricing for the coming year
Small businesses have been disproportionately impacted by many factors this year, including inflationary pressures, changing consumer behavior and supply chain disruptions. If you haven’t adjusted pricing to compensate for these factors, consider implementing appropriate price increases that won’t be disruptive to your customers.
6. Prepare in advance for tax season
If you have a comprehensive system to file your receipts and paperwork, it makes tax season a smoother process. Mark your calendar with tax deadlines and have an early conversation with your Certified Public Accountant (CPA) to develop your tax strategy.
7. Improve your personal credit score
Lenders will consider your personal credit score if you apply for a business or personal loan. It’s wise to take steps to improve your score, such as reducing debt, paying bills on time and avoiding excessive credit inquiries. A higher credit score will make it easier for you to obtain lending terms that are favorable to your business.
8. Set company benchmarks that are based on standards in your industry
Benchmarking allows you to compare your performance to industry standard metrics. If you measure and compare your performance, it’s easier to understand what improvements to focus on in your business.
9. Be proactive in evaluating your financial needs with your banker
If benchmarking reveals you need additional capital to meet or exceed industry standards, now is the time to meet with your banker. If you can line up funding when you need it, your business is more likely to meet its goals.
10. Consider SBA loans to gain valuable benefits for your small business
If you’re a small business owner who needs capital, the U.S. Small Business Administration’s 7(a) loan program can be a powerful option. These loans are guaranteed by the SBA so more businesses can qualify. They have many benefits, which often include reasonable interest rates, low down payments and long repayment terms.
Your Zions Banker Is the Ultimate Business Workout Buddy
You don’t have to go through any of these financial exercises alone.
If you’re trying to get into shape, find a gym buddy. If you’re trying to get your business in shape, find the right banker.
A Zions Bank business banker can offer a personalized, local approach in scaling your business. You’ll gain a major advantage from working with a relationship manager who provides tailored financial strategies, deep market understanding and a comprehensive analysis of your needs.
Taking proactive steps to improve the health of your business will position you for success in 2026.
