It’s that time of the year where most are reflecting on the previous year and creating their own personal goals for the upcoming year. This will finally be the year that we drop 10 lbs, reduce alcohol consumption, quit smoking, join a gym, finish a marathon, etc. As you’re constructing your personal goals or executing on them today, don’t forget to do the same for your business, or at least understand how you are going to remain inside the budgets you have already put in place for this upcoming year.
Here is a list of our suggestions for financial efficiency priorities in 2025 (feel free to borrow!):
Set a Budget or Projections … and then track to it monthly
This one may seem obvious, but lots of people don’t start the year off with goals or a plan to achieve them. Setting a budget will allow you to refine your objective - “how many people do I need to hire to hit that revenue target?” or “should I be focused on achieving breakeven vs growth at any cost?”.
Stress-test financial plans for various scenarios to prepare for market fluctuations. “What are the possible impacts of tariffs to my supply chain?”
Create contingency plans to handle economic downturns or unexpected expenses effectively. “What are my alternatives if this scenario happens?”
Conduct routine internal and external financial audits/reviews to identify inefficiencies and areas of improvement.
Diversify Revenue Channels
Explore new revenue streams such as subscription models, partnerships, or additional product lines.
Reduce reliance on a single source of income to mitigate risks, especially any customer concentration.
Lean Operational Practices
Take a deep look at all of your expenses and make sure they are being used efficiently.
We especially recommend re-evaluating all of your subscriptions and making sure they are being used the way you expected them to be used.
Minimize unnecessary expenses and focus on cost-effective operations.
Adopt agile methodologies to streamline processes and reduce resource waste.
Cash Flow Management
Weekly cash flow projections can be really helpful and avoid not having enough cash in the bank on payroll or for other important AP moments.
Track financial metrics like gross margin, burn rate, and customer acquisition cost (CAC) to ensure efficiency. Make sure your metrics are meaningful and not just ‘vanity’ metrics; ie. The number of users is vanity, the number of paying users is meaningful.
Adjust strategies based on real-time insights. Think: multiple small course corrections versus a full pivot.
Explore Alternative Funding Sources - Quit MCAs!
Merchant Cash Advances are a trap and very often hard to get out of (which is why we have cautioned about them before in this blog post). This is because the payback time is so short that you often cannot grow your business fast enough to outpace the cost of them and therefore you have to take another one to pay off the one that you originally took.
Leverage non-dilutive funding sources such as revenue finance, or grants if they are available.
Take only what you need today, not the full amount that is being offered.
Other good debt options can be SBA or bank lines of credit, but they can take up to 6 months to secure so make sure to plan appropriately and start the process early.
Data-Driven Budgeting
Use financial analytics and tools to create precise budgets (some good apps include QuickBooks Accounting, Freshbooks, YNAB (You Need a Budget)).
Regularly review spending against forecasts to adjust strategies dynamically. We suggest doing this at least monthly and for cash flow projections weekly.
Negotiate and Renegotiate Contracts
Regularly renegotiate terms with suppliers, landlords, and service providers for cost savings. Note that you will have more success with this if you are rigorous about meeting the obligations to which you have already committed, and keeping in mind the other party’s needs and objectives as well.
Build strong relationships to secure better pricing and flexible payment terms.
Optimize Pricing Strategies
Regularly review pricing models to maximize revenue without alienating customers.
Look at what your competitors are doing. Have they changed pricing from monthly to annual or visa versa? Should you do the same? Can you bundle some services to create a better value proposition to you and your customers?
Implement Performance-Based Incentives
Replace fixed bonuses with performance-based incentives for employees to align costs with productivity.
Encourage results-driven efforts to enhance company efficiency.
It is really important that you are clear with your employees about how these will work. A written policy that everyone can refer to is best.
Tax Optimization
Stay updated on local and international tax laws to minimize liabilities.
Leverage available tax credits, deductions, and incentives for startups.
Is there a local start up community that is tracking these benefits and can help you take advantage of them? Often your accounting firm or attorney will have a newsletter summarizing such statutes. One great example of this is from our accounting firm Eide Bailly; see their newsletter here.
Although the list is long, setting some goals related to improving your company’s financial efficiency strategies can balance cost management with sustainable growth and help you maintain a competitive edge in 2025 and beyond. And of course, if you want to explore the non-dilutive funding mentioned in #5 above, please reach out to us!
About Sage Growth Capital
Sage Growth Capital makes revenue-financed investments in companies at any stage who need growth capital. It is our mission to provide a more flexible funding option to growing companies who do not fit traditional equity or lending models. To learn more about Sage Growth Capital or to apply for funding visit: www.sagegrowthcapital.com.
About Revenue-Financed Capital
Revenue-financed capital (RFC), also referred to as royalty financing, revenue share or revenue-based financing (RBF), is a non-dilutive form of growth capital where investors receive a percentage of monthly revenues until a set amount has been paid. RFC differs from equity financing as the investor does not obtain ownership of the company and it differs from debt financing as there is no collateral required and payments are variable. RFC is designed to empower entrepreneurs to grow their businesses with non-dilutive capital that aligns with their sales cycles.