Are you hoping to grow your business this year or simply ensure it is stable enough to continue trading until economic conditions improve? Whatever your hopes for the new financial year, it’s time to take those steps that will positively shape the way the coming year will look for you.
There are a few simple resolutions that any business regardless of sector, size or location can make which will result in a stronger business with the best chance of growth for the next twelve months and beyond.
Resolution 1: I will improve my appearance
File annual returns and financial accounts on time and make sure your business looks strong and healthy.
This may seem like a simple resolution, but it will make a significant difference to the way you are viewed as a business. Small businesses in particular do not always realise the significance of these key dates. In depth research has shown that businesses with poor trading results tend to delay submitting their accounts, so late filing of accounts can be a sign of financial distress. It is vital that SMEs don’t inadvertently create this impression, because it will impact on their credit scores. This could, in turn, impact their ability to access finance and attract new customers as well as force new suppliers to impose stringent trading agreements.
Moreover, firms should consider filing full rather than partial annual accounts. Most SMEs only file abbreviated accounts at the end of a financial year, which will not always give a full picture of their overall financial health. In some cases the information filed can be misleading – for example, it can make it look as though the balance sheet is declining which can lead to a lower credit score. With this mind, SMEs should engage with reference agencies to keep them informed of significant financial changes and the reasons why they have occurred.
Resolution 2: I will find healthy ways to increase in size
Carry out a simple review of all your customers to find those growth opportunities and cut out the things that are bad for your business.
The end of their financial year is an ideal time to take a look at your customer base and review the credits limits that have been agreed with customers to see whether they are still right for your business.
Our data shows that the average financial health of UK businesses has seen a slow but definite improvement since August last year. This means that they are good businesses to work with. How many of your customers have grown and strengthened since you first secured their businesses? Are there opportunities to get those customers to buy more or buy other services from you, by offering them a higher credit limit?
Credit check all your current customers and the agreed credit limits that you have with them. This is a simple but very effective way to establish where the opportunities lie. It is also a vital way of finding out where the potential dangers are too.
Max Firth is managing director of Experian’s business information services.
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