Welcome to our #AskACPA feature where we answer financial, accounting and business questions.
Question: As a woman small business owner, what are tips to transition into the new year?
Entering a new year as an entrepreneur, whether you have a side hustle or full-time business, is not just a fresh start, but an opportunity to transition into a more fruitful business season. While it is important to set goals for your business, it is also crucial to effectively make the transition from one year to the other, especially as related to your finances and accounting. This is especially important considering the many disadvantages faced by women-owned businesses as a result of the current COVID-19 pandemic, despite the increase in new entrepreneurial ventures started by women during this period.
As an entrepreneur, how you finish one year, and start another year sets the tone for the future of your business. Many, if not most important metrics by which your business’ performance are measured, including budgets and benchmarks, are set at the beginning of the period. The goals set ahead are also defined at the beginning of the year, which all make the transition from one period to the other a particularly critical time.
If you’re working through your business transition from one year to another as a female entrepreneur, here are a few steps that may help:
- Re-awaken your business’ WHY
Before even delving into financial and accounting figures and projections, the first step is to refresh your business’ WHY. That is your business’ purpose, the reason why you started it all in the first place. Your financial and accounting processes are only significant enough to the point where they are aligned with your business’ WHY.
After all, all your financial and accounting performance does is tell the story of your business, defined and embodied by its purpose. It’s the same purpose that ought to drive your strategy, and ultimately your financial results.
What is your business’ WHY? Has it changed from last year to this period? If so, in what ways? Are you still in alignment with it or have you lost sight of it?
- Be honest about where you stand financially
This is especially important if your business is on a fiscal year calendar, which means it reports its financial results on a calendar year basis. As such, year-end financial statements and reports constitute an excellent barometer to assess the business’ performance in the course of the prior year.
As you closed the prior year a few days/weeks earlier, where do your business’ revenues stand? Have your revenues increased or decreased in the course of the prior year? How have your business’ expenses changed? What other parts of your financials have been affected? What are the reasons behind these changes, if any?
Being honest about, and understand where your business stands financially, allows you to transition into a new year with a better sense of the modifications needed to further your WHY.
- Make a plan
Last but not least, relying on a refreshed sense of your business” WHY, as well as a clear understanding of where your business stands financially, allows you to confirm any goals you’ve set. Even better, it lets you devise a plan to reach these goals in a way that aligns with your business’ WHY, and address any gaps identified when reviewing your prior year performance.
Transitioning into a new year as a business requires a bit of a process. These 3 steps can help smooth out the transition and set you up for a successful year ahead.
The Corporate Sister.
