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16 Financial Tips For Business Leaders Planning For Q1 2023

As the year comes to a close, businesses are focusing on closing out the fourth quarter in a strong position and getting through the holiday hustle and bustle. Business leaders are also likely planning for Q1 2023.

With rising interest rates, an uncertain economy, ongoing inflation and the effects of the “Great Resignation,” there are plenty of factors for business leaders to consider when setting goals and plans for 2023. Below, 16 members of Forbes Finance Council offer financial advice for business leaders making preparations for the first quarter of the new year.

1. Focus On Liquidity

With experts predicting a recession in the next 12 months, it’s essential that business leaders focus on liquidity by reducing expenses and conserving cash. Recessions can be especially fatal to small businesses, which operate on tight margins. Cut unnecessary costs, pause on plans for growth or hiring and explore restructuring outstanding debts or renegotiating lease payments. – Luz Urrutia, Accion Opportunity Fund

2. Allow For Contingencies When Calculating The Cost Base

Business planning for the 2023 financial year is complex, as there are so many moving parts and remaining uncertainty in the global economy. Therefore, a cautious approach would be my advice—specifically, factor enough contingency into the cost base, given the rising costs of staff, utilities and products. – Andrew Collis, Moneypenny

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3. Build Up Your Forecast By Customer

Plan for your quarter by building up your forecast for revenue and margin by customer. Having believable and robust account plans that get refreshed with actions at least 90 days out is a must. Q1 2023 in particular has greater macroeconomic uncertainty. Talking to your customers now to understand their plans and their spending is critical. – Anisha Madan, Emids

4. Consider Your Insurance Model

Leaders should consider their insurance models. Self-funding will definitely lower cash flows in 2023, but self-funded employers should set aside reserves for claims incurred but not reported. Reserve estimates should be reviewed and adjusted annually. Changes in enrollment, costs and medical trends will impact year-end reserves. Some employers may even outsource this function to a qualified actuary for opinion. – Mehb Khoja, BCS Financial

5. Don’t Overlook Resiliency Planning

Embedding business resiliency planning to subject your business operating model to stress tests and economic shocks—and getting both executive leadership and the board to sign off on stress tests—can allow business leaders to act swiftly and reallocate capital and resources in the midst of a volatile operating environment. The key is to plan for the worst, execute decisively and remain focused on the long term. – Burhan Jaffer, Compass Digital Acquisition Corp.

6. Stay Attentive To Client Concerns

We are currently in unprecedented times, and business leaders need to prepare for the uncertainty we are facing. Make sure you are being attentive to clients and their concerns. Client care is always No. 1. For personal protection, consider evaluating your business to improve portfolio diversification, which can help you weather any potential storms. Hope for the best, but prepare for the worst. – Ben Carmona, Perch Wealth

7. Know How Your Cash Is Diversified

In preparing for Q1 2023 planning, I’d advise business leaders to have both a solid understanding of how their cash is diversified and an operating cash reserve strategy. The market is currently going through a lot of changes, and it will be important to have enough cash available to sustain the drastic market adjustments. – Ashley Harris, Boys & Girls Clubs of Central Orange Coast

8. Preserve Your Capital

Leaders should focus on capital preservation. If you are considering risky investments, don’t. If you have demand loans out there, call them in. Reduce credit exposure and unneeded volatility in your portfolio. At the end of Q1 2023, reevaluate and go from there. Remember, you can only deploy capital you have, not capital you had. – Ryan Pannell, Kaiju Worldwide

9. Modify Operations In Anticipation Of An Upswing

If tough economic times are causing your business to slow down some, use this as an opportunity to modify your operations to be ready for when things improve. It can often be easier to change things when work is slower than when it’s booming. You don’t want to be focused on improvements when business is booming. – Chris Tierney, Moore Colson CPAs and Advisors

10. Accelerate Borrowing In Q4

I’ve had recent dialogues with bulge bracket and middle market banks. The bulge brackets have taken losses on a few large bridge financings. That will give the larger banks a hangover for some time. Expect larger deals to struggle, middle market lenders to charge higher rates and overall credit conditions to tighten. I would accelerate any fundraising and borrowing I could in Q4 as a hedge. – Andrew Glaze, Wealth Stack

11. Ensure Adequate Emergency Funding

Leaders must stay nimble! Just as you would have an emergency fund in your personal life, be sure to have an adequate runway for your business. And cash yields have increased dramatically as the interest rate environment has evolved, so examine your banking options to be sure they are competitive. – Gregory Ostrowski, Scarborough Capital Management

12. Stay On Top Of Cash Flow Management

Business leaders must think now about managing cash, as many industries are shrinking. Seeking financing is critical for many small businesses, and they should have a strategy in place before they need the funds. When seeking solutions, they should consider alternative financing, which offers more flexibility and ownership retention and is often easier to garner than a bank loan. – Jennifer Palmer, eCapital Asset Based Lending

13. Intentionally Invest

Invest intentionally, and don’t just rely on cost-cutting your way to growth. Experts warn that inflation and supply chain issues will continue in 2023, so leaders should instead find ways to boost their organization’s resilience and drive efficiencies across their processes, from marketing and sales to customer service. Technology can support this, and investing in the right tools is worthwhile. – Kathleen Craig, Plinqit

14. Plan Your Income First

Leaders must plan their income first. Budgets, taxes and all other forms of financial planning in a business only matter if there is enough income. Plan your income out; plan your marketing, sales and delivery to create that income; and then go into other forms of planning. Even if you have an established business, you can always grow your income further. – Jerry Fetta, Wealth DynamX

15. Don’t Rely On Outdated Cost-Cutting Strategies

Don’t recycle your past cost-cutting strategies. As leaders, we’ve been forced to adapt before, and this time is no different. Priorities have changed; tech infrastructure is essential, security and robust supply chains will make a difference, and sustainability should not be a second thought. Don’t carry on as usual—reflect and differentiate between what used to be important and what is valuable today. – Karim Nurani, Linqto

16. Ensure You Have Access To Real-Time Data

Do a deep dive into the financial solutions your company is using and ask: Do these systems provide the real-time insights you need to make decisions at any given moment? Real-time data is the key to financial success—your business must be able to withstand changing macroeconomic conditions, and to do that, you need real-time visibility and granular controls that proactively help you control costs. – Michael Sindicich, TripActions