I know I rabbit on about this stuff, but it is so vital.  I've also read it is ideal to stay under 600 words in an article, so I'll try, but as some things need more detail, I might just go a bit over (and, you can always give me a call/email for more information!)

These are six top tips or resolutions to improve your new financial year:

1. Your business is just a pot of money - your money.  The pot is the sum of your capital plus debt funding plus reinvested profits.  One of the purposes of a business is to make a profit and you want to maximise this, and where possible, reduce the capital inputs.

2. What rate of return is required?

Risk free is about 4%, property say 9% long-term, and public shares 12% long-term.  For the risks of business, you want a higher return on investment (ROI), perhaps 30% p/a is not unusual.

3. Understand the financial drivers of your business

Sometimes this is sales volume and unit prices, or gross profit margin, and can also include working capital or equipment investment.  It's not good to sell more with less margin (discounting) because you can end up making less profit.  You need to know what changes will give more profit.

4.Sometimes, Think small!

Don't only increase prices.  Small changes in several areas can have a huge effect on profit and cash, valuation of the business, and return on capital employed (ROCE).  We use some great software to do this financial model, and also look at improved working capital management.  (Takes about half an hour, points the way to a huge difference in profits and valuation).

5. Plan to achieve a set ROCE.

You know what overall rate of return you require (2), and using the financial drivers (3 and 4) it is possible to model what needs to change to achieve the return.

6. Understand your Free Cash Flow (FCF)

You can make a profit but still have no cash, due mainly to management decisions or accounting policies.  Lots of cash is often tied up in stock, debtors, and surplus plant or vehicles.

All businesses, big or small, face the same issues.  The solution is the same too:

- It's your business, decide what you want from it (set Objectives - Turnover, GP, net profit, ROI)

- Decide what 1 or 2 strategies could achieve these required objectives

- Model the results (the various tactics); put prices up, acquire more leads, obtain higher conversions of leads, etc.  We have the software to help you do this and simplify the thinking.

- Model the Forecast Profits and Cash (good software makes this easy too).

This is a good time to make some resolutions to change the shape of your business, and your life.  Getting the model right lets you concentrate on the 2 or 3 things that will create the biggest benefits.