by Jean Miller | Accounting News, Business Growth, News, Newsletter, Small Business
Running a small business in 2025 presents both challenges and opportunities. To stay ahead of the competition, you must adopt a proactive approach to planning and execution. By focusing on the following strategies, you can set your business up for success this year and beyond.
Reevaluate Your Business Plan
Your business plan is the foundation of your company’s success and should constantly evolve as a roadmap for goals and strategies to help grow your business. Take time to revisit and update it, reflecting on changes in the market, industry trends, foreseeable challenges, and your company’s current position. Define clear objectives and align them with your long-term vision. A well-structured business plan effectively guides your daily operations and long-term decisions. The start of a new year is an ideal time to reexamine your company’s progress and milestone markers—and shake things up if you’re not meeting goals.
Stay Informed of Market Trends
Staying informed about market trends and customer needs is essential. Conduct regular market research to understand your audience’s evolving needs and monitor competitor activity. What have your competitors done to up their game? Have they introduced new products or improved customer service? What is the plan for your company in response? Additionally, take a proactive approach and look for opportunities for growth and adaptation. Use tools like Google Trends and industry reports to gather insights, enabling you to identify market gaps and stay relevant in a fast-changing environment.
Control Cash Flow Efficiently
Cash flow is the lifeblood of any small business. Create a detailed budget and regularly monitor expenses. Utilize accounting software to track income and outflows in real time and follow up on delinquent invoices. Establish a cash reserve for emergencies, optimize inventory management, and consider renegotiating payment terms with suppliers to maintain a steady flow of funds.
Leverage Technology
Technology can simplify operations and improve efficiency. Explore tools like customer relationship management (CRM) software to enhance client interactions, project management platforms like Asana and Trello to boost team productivity, and Paychex Flex to help streamline payroll and benefits. Automation tools can also save time on routine tasks, freeing you to focus on growth opportunities.
Empower Your Staff
Your team can be your greatest asset. Offer opportunities for skill development through training programs and workshops. Encourage open communication and provide regular feedback. Investing in your employees helps to build loyalty, boost productivity, and cultivate a collaborative work environment.
Focus on Marketing and Networking
Marketing is crucial for driving growth and attracting new customers. Aim to develop a multi-channel strategy that includes content marketing, email campaigns, and paid ads. Focus on your website’s search engine optimization (SEO) to improve visibility and build a social media presence to engage with your audience.
Additionally, as valuable as an online presence is, networking is still highly beneficial to growing your business. Attend industry events and conferences, join local business groups, and actively participate in online communities to build relationships that can lead to valuable opportunities.
Set Specific and Realistic Goals
Success requires clear and actionable objectives. Set SMART goals—specific, measurable, achievable, relevant, and time-bound. For example, aim to increase sales by 15% over the next quarter or onboard five new clients within three months. Create a plan and break larger goals into smaller tasks to stay focused and motivated. Remember to track your progress, adjust your goals as needed, and celebrate milestones and achievements as you go.
by Stephen Reed | Accounting News, Industry - Construction, News, Newsletter
Managing cash flow in the construction industry can be challenging, and it’s crucial to understand the difference between income and cash flow to avoid falling for the illusion of profitability. Many construction businesses may appear profitable on paper, but they could face significant financial issues if they’re not managing cash flow effectively. In this article, we’ll discuss the common pitfalls that lead to the illusion of profitability and practical tools to boost profits.
Income vs. Cash Flow: Understanding the Difference
Income refers to the total amount of money a business earns from its activities, such as contract payments, sales of materials, or other services. Cash flow, on the other hand, is the movement of money in and out of the business – all the ways it is earned and lost. While income is a measure of profitability, cash flow is a measure of liquidity. Positive cash flow ensures that a business can meet its financial obligations, such as paying suppliers, employees, and other expenses.
Money In and Money Out
In the construction industry, the timing of money coming in and going out can create significant cash flow challenges. Payments from clients may be delayed due to project milestones or interruptions, while expenses for materials, labor, and equipment are typically paid upfront. This imbalance can strain cash flow, making it difficult to cover operating costs, even if the business is profitable on paper.
It’s also important to consider all the different means of “money-in” and “money-out”. “Money-in” can include tax credits, borrowing funds, selling equipment, acquiring investors, and earning investment income, while “money-out” can include profit distributions, paying taxes, purchasing assets, and repaying loans.
Being intimately aware of all the moving parts of your financial landscape – the cost of goods and services sold, your overhead and operating costs, loan payments, taxes, etc. – will help to keep from falling into the illusion of profitability.
The Illusion of Profitability
The illusion of profitability occurs when a construction business appears to be doing well based on its income statements but fails to account for all financial factors. This can happen if a company overlooks expenses, underestimates project costs, or fails to manage receivables effectively. For example, a business may complete a high-revenue project but if the client struggles to pay on time, this can lead to cash flow problems. This illusion can mask underlying financial issues, putting the business at risk.
Tools to Boost Profits
- Understand Current Business Cash Standing
Regularly reviewing your business’s cash standing is essential. This involves monitoring cash flow statements, balance sheets, and profit and loss statements. By understanding your current cash position, you can make informed decisions about spending, investments, and managing debt. Regular financial reviews help identify potential cash flow issues before they become critical problems.
- Create a Cash Flow Projection
A cash flow projection is a forecast of your expected cash inflows and outflows over a specific period, typically 12 months. This helps you anticipate periods of cash shortages or surpluses, allowing you to plan accordingly. Include all expected payments from clients and all anticipated expenses, such as payroll, materials, and overhead costs. Be sure to account for seasonality issues and infrequent payments like liability insurance and worker’s comp. Regularly updating your cash flow projection ensures it remains accurate and useful for decision-making.
- Forecast Your Cash Flow Break-Even Point
The “cash flow break-even point” is a crucial financial benchmark indicating when a business’s long-term cash inflows match its long-term cash outflows. This point marks the transition from operating at a loss to generating profits.
The best way to forecast this is to create an adjusted break-even cash flow forecast to help you determine the minimum amount of cash needed to cover your operating expenses and avoid cash flow deficits. This forecast takes into account all fixed and variable costs, helping you set realistic financial goals. Do you expect an increase or drop in sales and production volume? What about receivables and payables, payroll expense changes, and inventory or supply management issues? By understanding your break-even point, you can better manage your pricing, project selection, and expense control to ensure sustainable profitability.
- Manage Your Cash Strategically
Effective cash management is critical to maintaining positive cash flow. Implement strategies such as invoicing promptly, offering early payment discounts to clients, and negotiating favorable payment terms with suppliers. Additionally, closely monitor accounts receivable and follow up on overdue payments. Controlling your cash flow ensures that you have the liquidity needed to meet your obligations and invest in growth opportunities.
