New financial year resolutions for SME owners

Financial year or Fiscal Year (FY) is usually one year in length (12 months or 52 to 53 weeks) used for accounting or budget purposes of an organization or a country. Accordingly, each year, organizations have to report a financial statement or make a tax declaration. The fiscal year may or may not correspond to the calendar year, depending on each country. In Vietnam, the Government stipulates that the financial year is the calendar year starting from January 1 and ending on December 31 or 12 months other than the calendar year which is permitted by the Ministry of Finance.

Fiscal year 2018 in Vietnam is about to pass, how has your business performed this year? It is glad that you are spending time reading this article, which means that your business is still good even outperformed this year.

However, even if last year was a successful year for your business, remember that there’s always room to be better. Year-end is a good time to look back on the old year and plan for the new year that commits more success and prosperity.

Here are some financial year resolutions for SME owners that you can consider and design a plan for 2019.

1/ Review and update your current business plan

Business plans are important for SMEs to develop. However, not every company has a feasible business plan. The end or the beginning of the year is a good time to review the performance of the business and to make a new plan for next year.

No matter how many percent of this year’s target is reached, the plan for the new year is also necessary. The new plan needs to be based on new trend, technology, or the last year's performance analysis.

In short, you do not need to make a whole new plan, all you have to do is sitting down and reviewing then updating the old one. That will help you starting a new year with clear ideas and steps. You understand the goals and how to achieve them. A good business plan decides 60% of the success of the business.

2/ Listen to your staff

The end of the year is also the appropriate time to conduct performance reviews for your team. You can ask team leader/manager to submit year-end report with detail comment and assessment on each member. Nomination or promotion is also an important part of this report. This is a traditional method which is used quite a lot, however, you should be careful with this method as it is so mechanical that it weakens the creativity of your staff.

In addition, instead of being overwhelmed in the report, you can hold an informal meeting with all employees, spend time listening to their thoughts about the company, the future goal and even about yourself. Respectful and open communication between you and your team increases the close-knit and understanding of the staff and the boss, as well as stimulates the contribution and commitment of them.

3/ Know your customers

Besides the contribution of employees, customers also play an important part in the success of your business. Having good staff with excellent products and perfect strategy is not enough to success if you have no customer. Therefore, knowing your customer is the key for any business endeavor. You need to answer the questions carefully: Who are they ? Why do they buy your products? and What is their experience with your business?

To answer those questions, you can submit surveys (online, offline) or analyze customer information data. However, survey is the traditional way that may cause boredom, noncooperation and you should use this method wisely by giving gifts, making open question, committing to address the problems in response to your customer feedbacks. Only by putting the customer's experience at the top can your business succeed and grow.

4/ Evaluate your cash flow

Although the business reaches the expected growth rate, many businesses, especially SMEs or startups are always faced with insufficient cash, losing control of cash flow, even bankruptcy. As a result, financial forecasting, cash flow analysis and market research play an important role in business operation and determine the survival of enterprises.

On top of that, investors and banks are concerned with cash flow to make investment decisions. If the cost is greater than the expected revenue, the revenue is not reached as planned, the bank or investor will underestimate this investment or loan.

5/ Collect overdued payments

The payment terms of your business applied for customers and suppliers have a significant impact on your cash flow. If you are using a 30-day payment plan for customers, consider discounting those who pay within the first 15 days

Don’t forget to chase up overdue invoices immediately or offer payment plans to customers who are having trouble making payments. Your business can also improve cash flow by stretching payment period with your suppliers.

Hopefully, these shares are useful to you and your business at the end of this year. Whether you have done the above or not, whether this year is a good year for your business or bad, sit down, think carefully, design a plan for the new year and move forward with confidence into the new financial year – better late than never!