Now that we have put 2020 behind us and are focused on our growth opportunities in 2021, it is important that entrepreneurs and small businesses implement specific strategies to increase their cash flow.
At AcceleratingCFO, here are the things that we are thinking about for our clients and our business as well:
The outlook for 2021 is positive: Depending on whether you see the glass half full or not, 2020 was a challenging year for most businesses. We are planning on an increase in revenue and profitability this year vs. last year — each company’s hurdle is relative to the extent of the increase. The silver lining in this is that the pandemic has allowed us to scrutinize costs and assess what is truly important for cash flow. Smart implementations will result in greater profitability in 2021.
Sources of growth are plenty: There is no surprise that migration to digital platforms will spur tremendous growth. Concurrently, access to multiple regions and countries has opened up without the expense of travel or meals. Services that were once restricted to meeting face-to-face are now carried out online — increasing sales and diversity of the products offered.
Investment in the business: By saving money in areas like travel and entertainment, business owners can switch their focus to investing in research and development for new products and services. This will lead to an increase in spending for IT infrastructure, cybersecurity, and business process automation.
Working from home — risks and rewards: Obviously this past year has illustrated how many jobs and duties can be performed in a distributed workforce environment. There are lots of pluses to be thankful, including the end of time-sucking commutes into metropolitan areas and increased flexibility for workers to help them manage their work-life balance more effectively. However, business owners must understand that if their workers don’t have adequate protection from hackers and cybercriminals, their data and competitive advantage could potentially be stolen from them with impunity. There is also a challenge to ensure that workers are managed properly and remain motivated without being in the presence of the boss.
The financial impact of Democratic leadership: The inauguration of President Biden and his administration will result in changes to both personal and corporate taxation policies. All CFOs should carefully watch the impact of new rules and regulations to minimize any increase in tax liabilities and maximize any loopholes that could result in hidden tax credits.
PPP – Forgiveness and the 2nd Draw: CFOs will need to make sure that they stay current on the changes made on both PPP loans being issued (for those eligible for a 2nd loan) and changes in the formula for forgiveness of both PPP 1 and PPP 2 loans. A third dip into a similar loan program is unlikely. Therefore, it’s important to ensure adequate cash flow from both the company’s operations and potentially advantageous SBA loans to reach higher profitability in 2021.
Takeaway: 2020 is over, and entrepreneurs and business owners alike need to focus their attention to making 2021 their best year ever. Although there are many risks that need to be addressed, businesses should take solace in that pandemic-induced cost cutting efforts should reap even greater benefits in the months and years to come. If you need a free consultation, please contact us at firstname.lastname@example.org.
Co-founders & Managing Partners