The beginning of a new year is more than just a symbolic fresh start. For business owners, it is the perfect opportunity to pause, reflect, and reset your financial and strategic direction. A well-planned review not only reveals how your business performed but also positions you to make better decisions for the year ahead. Here are key steps to strengthening your business foundations as you enter the new financial year.
Do a Financial Health Check of Your Business
Year-end is an ideal time to evaluate the financial health of your business with clarity and objectivity. Start by reviewing your financial statements and performing basic assessments of liquidity, solvency, profitability, and return on investment.
These metrics offer insight into how well your business is managing cash flow, meeting financial obligations, generating profit, and creating value for owners or shareholders.
To make your analysis more meaningful, compare these results with past years to identify trends. Are your margins improving or shrinking? Is your cash position stronger than before? In addition to internal comparisons, benchmark your performance against similar businesses in your industry. This helps you uncover strengths you can build on and weaknesses or potential threats you should address before they become bigger issues.
A simple health check like this can provide powerful clarity on your overall financial trajectory.
Draw Up a Budget for the New Financial Year
With a clear understanding of your financial standing, the next step is to prepare a budget that supports your strategic direction. Your budget should align closely with your overall business plan so that resources are channelled effectively toward the objectives you want to achieve.
If your budget reveals that certain goals are not financially feasible, you may need to consider additional funding sources such as bank financing or adjust your strategic priorities to stay realistic and sustainable.
When setting your budget, always document your underlying assumptions, such as projected sales, cost estimates, or market conditions. These assumptions form the backbone of your financial planning. By adjusting them, you can stress test your business and understand how changes in the environment, such as rising costs, slower sales, or economic shifts, would affect your financial position.
Once the budget is set, monitor it closely throughout the year. Comparing actual results against your budget helps you stay accountable, spot deviations early, and make timely corrective actions.
Check Your Positioning: Do You Need to Register for GST?
As part of your year-end review, it is prudent to re-evaluate whether your business needs to register for GST in the coming year. If your taxable turnover has crossed or is expected to cross the compulsory registration threshold (>S$1 million), you may be required to register.
Reviewing this ahead of time allows you to prepare properly and avoid non-compliance. Refer back to the previous article for guidance on GST obligations and registration criteria.
Understanding your GST position also gives you better visibility into pricing, customer communication, and administrative processes you may need to update. Taking the time now to confirm your GST status helps ensure a seamless transition if registration becomes necessary.
The Bottom Line
Reviewing your financial health, preparing a realistic budget and reassessing your GST obligations ensures your business enters the new year on solid footing. Taking these steps now helps you stay focused, make informed decisions and remain adaptable in a changing business environment. With clear insights and thoughtful planning, you can position your business for a stronger and more successful year ahead.
If you need guidance or support, our team at Verti is ready to assist. Contact us at contactus@verti.sg or +65 6909 5691.