For small- and medium-sized businesses, the first year of operation is a crucial period to launch a new entrepreneurial endeavor and hopefully turn a profit. Thanks to modern technology, it has become easier than ever for small businesses and startups to find footing in the first 365 days. In fact, the Bureau of Labor Statistics (BLS) estimates that 80% of startups have a shot of sticking it out by their first year’s end—though not without ample strategy.
While accounting and bookkeeping seem less than glamorous, demonstrating a concrete financial business model is far more beneficial than leaving numbers up to chance. Odds are, small businesses aren’t leaving their finances out to dry, but there are still some checkpoints owners and entrepreneurs can aim for when the spreadsheets are finally laid out.
From going paperless to cutting overhead to commanding financial transparency, here are five goals small businesses should meet within the first year:
While figuring out what expenses are necessary for operations, the numbers must be easy to read and even easier to manage. Small businesses and startups are encouraged to configure an all-in-one solution that gives the financial leaders of a small business a window into what is being spent and who is spending it. Many technologies can even enable leaders to set parameters for individuals and subgroups, so the expense reporting manages itself, leaving small businesses more time for other areas of development.
The tallies are in, and the company didn’t need that recurring subscription or the hefty office supply order. In this case, a study on what expenses the small businesses thought were necessary versus what was actually needed could be in order. Rather than a cut-and-run strategy, consider optimizing what is already at hand.
Maintaining vigilance on expenses means greater accountability for deductions that can be utilized to build business later down the line. Small businesses should take full advantage of startup costs, legal and professional fees, charitable donations, and interest when tax season rolls around to get the greatest return for future business initiatives. Managing all those receipts and staying current on data entry can truly add up over time.
Even if the business is booming, it is important to remain proactive about preparing for a rainy day. All industries are at risk of a slow season, so when sales are flowing in, small businesses should be prepared to create an emergency fund that can be used when cash gets tight. Set a goal for a specific amount in savings every six months that can be filed away.
Though small-business cards exist, corporate cards ensure no personal liability for company owners or employees, and employees aren’t left waiting around for reimbursement. Corporate cards also enable easier reporting and expense tracking, and businesses can earn the rewards directly to be dispersed at the company’s own will.
A 2021 survey conducted by Navan of businesses found that 53% of respondents do NOT have a dedicated T&E expense management solution. Instead, many companies have cobbled together a financial tech stack—and many of those tools haven’t kept up with changing spending behaviors. Roughly 86% of these respondents work for companies in the U.S. with fewer than 1,000 employees, and 60% had fewer than 100 employees.
Luckily, with Navan Expense, small businesses can take advantage of an easy-to-implement, all-in-one solution that gives employees, managers, accountants, and finance leaders the tools they need to level up their spend management processes.
The goals are set. Now it's time to let Navan Expense help small businesses achieve them. Ready to start using Navan today? Get up and running in 5 mins.