Nailing Finances in Q1 for Small Business Success - Jennifer Sakowski (2024)

You and I are a lot alike. We share that same entrepreneurial spirit. We have a vision, take risks and dive right in, head first, no fear, ready to sell the dang thing!

Warning! Red Flag Alert! This is when the spending starts, am I right? We’re buying all the software, hiring new team members, ramping up marketing, maybe even buying that leather couch for the office.

All those expenses add up and we reach an overwhelming point where we realize we need help building out a budget.

I can’t stress this enough: know your numbers. I’ve met so many small business owners over the years who are clueless about their spending and profits.

And I get it: it can be extremely uncomfortable when we’re forced to face our numbers, especially if we’re in the red (ouch). I know financial planning might sound overwhelming, but trust me: It’s crucial for your success.

Reflect on the Past, Focus on the Future

The first thing I want you to do is to take a moment and look back at the previous year. What worked? What didn’t? Learning from the past helps you chart a course for the future.

Once you’re ready, it’s time to define clear, achievable goals – they give you direction and purpose. Q1 is the perfect time to create a budget. Break down your expenses, allocate resources wisely and watch your business thrive.

Play the Projection Game

Cash is king, right? Q1 is when you manage your cash flow. Projecting and monitoring cash flow helps you avoid those unexpected potholes on the business road. You have to play the projection game.

Complete your books for the prior year. How’d you do versus 2022? Did you see a profit or a loss?

If you’re in the black, great! I’m high-fiving you. But that’s not always the case.

Statistics suggest that half of all small businesses FAIL within 5 years of opening their doors. About 18% fail within the first year and 65% fail after 10 years. Why can’t startups find success? A CBinsights’ survey revealed that the main reason is due to running out of money and an inability to raise new capital.

Financial Dashboard

If you are like me, I was struggling to use Quickbooks. Quickbooks was great see what has already happened in my business but did not give me a good view of what i was projecting. I created a simple spreadsheet that listed what my expenses were on one sheet and what I expected to receive on another. After taking the time to fill in the Revenue sheet and Expenses sheet I could quickly see if I was ‘in the red’ or not month over month.

Setting a weekly recurring task for myself to review the financial dashboard kept me focused on my numbers. I dedicate time each week to make sure I’m doing what i need to do to bring more money into my business. Until I could visualize what that looked like, I struggled to set financial goals.

Recurring Revenue is Key

One trick to avoid ending in the red is to track your recurring revenue. This refers to income that is expected to continue regularly over time, typically through ongoing sales of products or services.

This can include:

• Subscription Services
• Membership Programs
• Retainer Agreements
• Maintenance Contracts

For my digital marketing company, Raney Day Design, our Website Care Plan is our bread and butter. It sets us apart from other local agencies. When we launch a website, RDD becomes our client’s business BFF for the next 12 months or longer. We provide 24/7 monitoring to ensure software is up-to-date. The care plan started out at $115 per month when I launched it and has since grown since we have a 90% closing rate for enrollment.

I Buy Software Like Some People Buy Shoes

I am the poster child for Shiny Software Syndrome. If I see a new Artificial Intelligence program or a new tool that’ll help our team with SEO, I’m SOLD. I will sign up for a free or discounted trial and test it out for a month or so.

But here’s the kicker. Sometimes I forget to go back in and cancel my service– so I’m getting charged for things that I’m not using! That really burns me up. So I created a monthly task that is auto-created by an emailed expense report from QuickBooks Online into our project management system, Click-Up.

I’ll go through the data and crunch the numbers to see where my money is going – and whether it’s being wasted. I can’t stress this enough: be sure to cancel services that we are not using. Ask your team members what software they use and what they don’t so you know what expenses to put on the chopping block.

Debt Detox

If debt is weighing you down, Q1 is the time for a detox. Evaluate existing debts, make a plan to reduce or restructure, and free up room for your business to breathe.

• Maybe you want to:
• hire a new team member
• purchase new software
• lease a new office space
• buy a new company vehicle

If you want to make these dreams a reality, this is where we have to have hard conversations with ourselves and we cut down on little expenses.

Friend, do you really need to go to Starbucks everyday? Now that’s coming from the girl who loves some coffee – it’s in my tagline. But if we are truly looking to do things differently this quarter, then we have to make cuts. Maybe a trip to the coffee shop is non-negotiable for you. That’s fine, but you need to make cuts somewhere.

More Quick Hitters

Sales Forecasting

Identify your most profitable service or product. This involves predicting future sales based on historical data and market analysis. Also looks at customer behavior patterns and economic factors

Employee Performance

When’s the last time you gave your team a raise? How are you pouring into the people who show up day after day to get the work done? On the flip side, if a team member is underperforming, then you have to have hard conversations. You either coach them and provide them with resources to grow or help them find employment elsewhere.

Tax Tackling

Taxes may not be the most exciting topic, but understanding the tax landscape in Q1 can save you headaches later. Explore deductions, credits, and ensure you’re on the right side of the taxman. Obviously, I am NOT an expert on this however I do pay a professional to keep me on the up and up!

Emergency Umbrella

Picture financial planning as your business umbrella in a storm. Q1 is when you establish an emergency fund and create a plan for unexpected challenges. Be ready for anything.

Trustworthy Team

I have to give a huge shoutout to Trica Seil, owner and accountant at Healthy Accounting in Greensburg, PA. She has done a phenomenal job of holding my hand as we make hard choices within the company and she breaks down the numbers in a way that I understand. Just like in the tax department, I make sure I can lean on professionals like Tricia to help me know my numbers.

Helping You Through Difficult Decisions

So know your numbers. Stop being afraid of them and face them head-on.

Use a spreadsheet or dashboard to keep track of your income and expenses each month so you can make informed decisions about your business and where you need to scale.

Of course I am here to have those hard conversations with you and I can help hold your feet to the fire when you’re needing to make those difficult decisions in order to grow. Let’s Schedule a Call and talk it out!

In the meantime, comment below one expense you could give up to save money in your business.