Build a Better Business in 2025: Keys to Profitability

On the eve of 2025 you are thinking of setting your business goals. It is an essential practice but not one you might be looking forward to doing. You were not able to complete 2024 goals scheduled for completion by now. Don’t despair. Here are some tips that work for those of our clients we confer with:

Undoubtedly, you are familiar with setting S.M.A.R.T. goals–those that are strategic, measurable, achievable, relevant to your business, and timed—tied to a schedule of completion. Let us talk about 2025 and how to move forward in setting your business goals.

First, review how and if you achieved your 2024 goals. What moved you forward with revenue growth, improving business operations, or maintaining a positive cash flow. Equally important, what did not work? Were you too ambitious in setting a goal? What efforts failed and why? Were you lacking sufficient knowledge to achieve a certain goal or lacking the proper resources? If you say yes to any of these assessments, be more reflective and more knowledgeable about setting S.M.A.R.T. goals going forward. Carry over valid 2024 goals to organize your work for the new year.

Secondly, wrap up your 2024 financial reports—balance sheet, income statement (aka profit and loss statement), and cash flow statement to ascertain the health of your business. Ideally, you have been creating these reports on a monthly basis. Look at your numbers to solidify your 2025 (and beyond) goals. In no particular order, here are some areas you should review to be more profitable in 2025:

Look at your operating costs for possible cuts in expenses. Need to research new lower-priced vendors?
Review staff salaries and benefits with an eye toward rewarding and retaining great talent.
Identify new pricing opportunities to improve your gross/net margins.
Educate yourself about artificial intelligence and other technological advances to work smarter, faster, and better.
Make sure each marketing strategy is measurable and reap an acceptable ROI.
Collaborating with your accountant ensures your tax strategies take advantage of all possible deductions.
If appropriate, outline the steps to become more creditworthy.
Determine if a loan, other credit product, or the sale of an asset would improve your cash flow.

Thirdly, are you spending your resources and time wisely and productively concentrating on the aspect of the business that is giving you the best return? In short, you should be able to pinpoint which products, marketing activities, branding initiatives are bringing in the most revenue; then re-allocate your resources to exploit these opportunities. It is called Pareto’s Principle or the 80/20 rule. You should focus on the 20% (or so) of your business activities and customer segments that bring in 80% (or so) of net revenue. This can be a very enlightening task, showing you which customer types you should find more of; where to cut marketing expenses that are not doing breaking even (or underperforming); and inform your growth strategies to build a better business. Check out this informative, digestible article on the 80/20 rule. https://corporatefinanceinstitute.com/resources/economics/pareto-principle/?

Best wishes for the New Year!