What Business Owners Should Prepare for in 2021

A tumultuous 2020 has many business owners wondering what may be in store for 2021.

With a new administration and a continuing COVID-19 pandemic, there is still so much uncertainty in the air. But our business banking officers have compiled a few tips to help you prepare for 2021:

 

Beware of Fraud

Unfortunately, fraud attempts were on the rise long before the pandemic and bad actors have only amplified their efforts. Whether your team is remote or you are an essential business, taking the steps to help protect yourself from fraud is vital to ensure you avoid becoming a statistic.

 

Seven Steps to Help Prevent Business Fraud

 

Cash Flow Management is Key

Keeping tabs on cash flow is always vital, but it is particularly critical now. Tracking your incoming funds and outgoing expenses, while factoring payment windows for both your customers and yourself can be really helpful. Putting expenses on a business credit card, for instance, may give you a 30-day payment window that allows you to collect payment from customers first. Some cash flow variables to monitor if you aren’t already can include:

• Receivables by customer: Track what customers or clients owe you, taking into account their financial health and status as an essential business. This will help to better identify when those funds may become available to your business
  
  
• Payables by vendor: Determine where your business expenses are, asking yourself which vendors are mission-critical and prioritizing how to pay vendors and if you need to utilize a line of credit or other method for expanding available cash. This is especially important if there is a gap between when receivable funds from customers arrive and invoices to vendors are due
  
  
• Projections: Forecast what business looks like for not only the next quarter to six months, but longer down the road by factoring in the next eight to 12 months to map potential income and expenses

Looking at this picture, ask yourself if there are areas where you can adjust to ensure you have enough cash on hand to handle any bumps in the road as we all patiently await a return to business as usual.

Learn How One Business Owner Grew Her Business to More than a Million Dollars in Revenue in Her First Year

The modified cash flow lifecycle may also help you make a plan for business survival amid the pandemic:

 

 Four Key Banking Services For Today’s Business Environment

 

Ensure You Have a Succession Plan Ready

A succession plan provides peace of mind that your business will be taken care of no matter what. You may have questions about what goes into this type of planning if you haven’t done it, but there are in essence five key steps:

• Step 1: Identify a Team: Bring in your team of experts — your banker, lawyer, financial planner, accountant and so on — to ensure all of your bases are covered as you develop your plan. By creating a reliable team, you will be able to maximize your return, and also minimize your risk and liability.
  
  
• Step 2: Establish the Value: This can be done by obtaining a formal business valuation with help from your CPA. Prepare for this conversation by first ensuring your other financial documentation is in order. From there, be sure you also know your profitability.
  
  
• Step 3: Remember the Tax Implications: Connect with someone who understands tax laws, as well as your financial situation, to ensure you are protected against any surprises in terms of the financial impact of selling your business and any resulting proceeds. Your team of advisors can help you decide what method of transfer is best.
  
  
• Step 4: Ensure Your Next Generation is Prepared: Whether you are looking to sell your business, or transfer ownership – make sure these incoming individuals are involved in the transition process. By introducing and training them – you can ensure they are well prepared to take on the challenge. An added benefit is that your existing employees will be able to build a relationship with their new management or owners.
  
  
• Step 5: Create a Post-Sale Process: Relinquishing control can be complicated operationally and emotionally. Create a clear and brief transition period when the deal is finalized and the transaction is closed.

Check Out More Tips Regarding Succession Planning

 

Rockland Trust Bankers Are Here For You

As you create or adjust plans for 2021, it is key to remember that you are not alone. Our business banking officers at Rockland Trust are here to help you examine your big financial picture, evaluate your plans and set up the pieces and processes to make your business’s financial goals a reality.

Check out our Learning Center for more helpful advice about owning a business or contact our team for help with specific questions.