New Year’s Resolutions: Here’s what SMEs need to think about in 2022.

Happy New Year everyone! 

You can let out that breath you’ve been holding for the last 12 months, because 2021 is finally over. Having survived another year of gruelling lockdowns, the shift back to more regular trading (and staff-juggling) in 2022 should hopefully have SMEs feeling productive and active.

As we return to something like normality, the new year is a perfect time to revisit some of your goals and practices to make sure your business is still on track for healthy growth. 

Here are some of the key areas that SMEs should be focusing on in 2022.

1. Undertake a cash flow forecast and then adjust your goals accordingly

Cash flow is king. If you don’t have a solid understanding of the projected cash flow for your business, then you’re going to have a hard time planning for the future. At the very least, you should keep a rolling cash flow forecast so that you can always see 3 months ahead. The new year is always a perfect excuse to do a 12-month projection as well.

Any business can put together a (very) rudimentary cash flow forecast by comparing their regular or scheduled cash outflows against cash inflows. However, it’s a much better idea to get in touch with the business advisors at Rees Group. They have specialist cash-flow forecasting software that accurately analyses all of your data and produces in-depth financial reports.

Read More: How proper cash flow forecasting can revolutionise your business planning.

Once you’ve forecasted your cash flow, you should ideally be revisiting your goals to make sure they’re still viable. Do you still have enough working capital to finance that expansion? Is now the perfect time to sell or merge the business? When it comes to strategy, having an accurate forecast in place will allow you to see clearly and act decisively.

2. Make sure you have a resilient supply chain in place

You may have been reading lately about supply chain woes around the world. You may even be experiencing them yourself. Unfortunately, this is a trend that’s likely to continue into 2022 as the world slowly adjusts to a post-pandemic environment. 

This means it’s more important than ever to review your supply chain. Make sure that every single link in the chain is robust and resilient, because it only takes one hiccup to cause a big disruption. For instance, you need to seriously consider locking in container freight and domestic transport & haulage, even if it costs you a premium. 

Future-proofing your supply chain sometimes takes a bit of lateral thinking and anticipating potentially complex problems.  If your goods are manufactured in a part of the world that’s currently struggling with inflation, your costs may shoot up suddenly. Closer to home, you need to anticipate how things might go. Think of the worst-case scenario, and then prepare for that.

 It’s also important to be aware of geopolitical tensions that may potentially affect you, like the ugly trade disputes between China and Australia that have devastated several industries.  This is why you should always aim to have a backup plan in case something goes awry.

3. Don’t take your people for granted. There’s a shortage of skills and resources right now.

The big workforce shake-up caused by the pandemic has left SME owners dealing with a double-edged sword. There’s a shortage of skilled workers across almost every industry, and employees are leaving their jobs in droves to fill the plentiful opportunities available

This means that it’s more important than ever for SMEs to take care of their staff. 2022 should be about investing in your team and making sure everyone is feeling engaged and fulfilled in their role. Your people are everything, and your business will struggle without them.

Read More: Why investing in your team creates a stronger, better business.

As working-from-home rapidly became the new normal, many SMEs had to make very quick decisions about their teams, their office and their processes. But these sudden changes may have left employees feeling disconnected or burnt out. Talk to your staff and get their honest opinion on what’s working and what isn’t.

Like all of these areas, it’s less about taking a one-size-fits-all approach and more about comprehensively reviewing where your business is at and responding to the situation effectively. The start of a new year is always the perfect time to reflect on your business and make sure you’re still on the right track for growth.

4. Consider whether your business structure is still tax-effective

It’s very rare that a business structure will stay tax-effective forever. As businesses grow and reach different stages of maturity, it’s sometimes necessary to change or adjust your business structure accordingly.

If your business managed to hit new heights in 2021, then the 2022 new year is the perfect time to review your business structure and potentially roll over to a new one.

For instance, Sole Traders and Partnerships may find that their income has grown to the point where they need to incorporate as a Company to avoid being taxed too highly. The director of a Company who’s planning to pass on their wealth and business to a family member might find that it’s time to establish a Family Trust.

Read More: Company or Trust? How to choose the right structure for your business.

These are just some of the reasons that a business may need to roll over into a new business structure, and each structure has different pros and cons. At Rees Group, our advisors specialise in designing effective business structures. We can help you make sure you’re making the right strategic choice for your business.

Hopefully, everyone has had a great holiday period. As we gear up for another year, focusing on these 4 areas will help SMEs ensure they’re still on track for business growth. Yet we know how hard it can be to focus on strategy when you’re busy running your business day-to-day.

If you need help implementing a review in any of these areas, don’t hesitate to get in touch with one of our talented advisors. They’ll help you reflect on your goals and make sure you’re still on the path to success.

The information in this article is of a general nature. It does not take your specific needs or circumstances into consideration. You should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

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