As a Shopify store owner, the new year offers a fresh start to optimize your financial health and plan for sustainable, long-term growth. It’s a time to set actionable goals, improve cash flow management, and strengthen your bottom line. In fact, the Bible reminds us in Proverbs 21:5 (ESV): “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.”
This verse underscores the importance of thoughtful, deliberate planning over rushing into decisions without a solid strategy. Below are ten New Year’s resolutions designed to help you diligently build, maintain, and grow your Shopify store’s financial fitness in the year ahead.
1. Set Clear Revenue Goals
Why It Matters: Vague statements like “I want to make more sales” won’t keep you accountable. When you define concrete revenue goals, you create a roadmap for what you want to achieve.
How To Do It:
Look at Past Performance: Start with last year’s sales. If you earned $120,000 in revenue, a 20% growth target sets a clear goal of $144,000.
Break It Down: $144,000 per year translates to $12,000 in monthly revenue. Tracking monthly progress helps you adjust marketing or promotional strategies as needed.
Use Historical Data: Factor in seasonal peaks or dips. If December holiday sales are typically higher, plan marketing campaigns around that to meet the monthly average goal.
Example in Action: If your average monthly revenue is $10,000, aiming for a 25% increase means targeting $12,500 each month. Over 12 months, that equals $150,000—a clear, measurable objective.
2. Implement a Profit First Cash Management System
Why It Matters: Simply generating revenue doesn’t automatically guarantee profit. The Profit First approach ensures you set aside profit each time a sale comes in.
How To Do It:
Create Multiple Bank Accounts: For example, open separate accounts for Profit, Owner’s Pay, Taxes, and Operating Expenses.
Allocate Percentages: Decide on percentages for each category (e.g., 5% to Profit, 30% to Owner’s Pay, 15% to Taxes, 50% to Operating Expenses).
Stick to the Percentages: Right after a deposit hits, transfer funds into each account according to the set percentages.
Example in Action: If you receive $1,000 in sales, you might allocate $50 to Profit, $300 to Owner’s Pay, $150 to Taxes, and $500 to Operating Expenses. This disciplined system prevents overspending and ensures profit doesn’t get lost in the shuffle.
3. Improve Inventory Management
Why It Matters: Too much inventory locks up your cash. Too little leads to stockouts, missed sales, and dissatisfied customers.
How To Do It:
Forecast Using Sales History: If a product consistently sells out, consider increasing your order quantity by 20%. If an item doesn’t sell, reduce your stock or drop it.
Track Inventory Turnover: Inventory Turnover = Cost of Goods Sold (COGS) ÷ Average Inventory. A higher number suggests you’re selling products quickly and efficiently.
Use Tools & Tech: Software or apps that integrate with Shopify can help automate stock level tracking and reorder notifications.
Example in Action: Say you spent $50,000 on inventory last year, and your average on-hand stock was $10,000. That’s a turnover ratio of 5 ($50,000 ÷ $10,000). If you aim for 6, you’ll need to adjust reorder points and possibly discontinue slow movers to free up cash.
4. Streamline Your Bookkeeping Processes
Why It Matters: Accurate, timely bookkeeping gives you a clear picture of your finances. It also prevents last-minute scrambles when tax season arrives.
How To Do It:
Automate Data Entry: Integrate Shopify with accounting software like QuickBooks Online or Xero. This pulls daily sales and fees automatically.
Set a Monthly Reconciliation Date: At the end of each month, reconcile your bank and credit card statements to spot discrepancies.
Review Key Reports: Keep an eye on your Income Statement, Balance Sheet, and Cash Flow Statement to quickly identify growth opportunities or problem areas.
Example in Action: Spending 30 minutes each month to reconcile statements can save hours at year-end and prevent costly mistakes. If you notice a mismatch between Shopify sales and your bank deposits, you can fix it before it grows into a bigger issue.
5. Understand Key Financial Ratios
Why It Matters: Ratios translate raw numbers into actionable insights. They reveal trends that might be hidden in your financial statements.
Key Ratios:
Gross Margin = (Revenue - COGS) ÷ Revenue
Current Ratio = Current Assets ÷ Current Liabilities
Inventory Turnover = COGS ÷ Average Inventory
Example in Action:
Gross Margin: If your revenue is $100,000 and COGS is $50,000, your Gross Margin is 50%. That helps you decide whether you need to raise prices or cut costs.
Current Ratio: If you have $40,000 in current assets and $20,000 in current liabilities, your ratio is 2. A ratio above 1 is generally safer.
Inventory Turnover: As discussed above, it measures how many times you completely sell your inventory during a period. A higher number implies faster movement and healthier cash flow.
6. Forecast Cash Flow Regularly
Why It Matters: Predicting when money will enter and leave your account helps prevent unpleasant surprises and ensures you can make strategic decisions before a crisis hits.
How To Do It:
Plan 3–6 Months Ahead: Lay out expected income and expenses for each month.
Account for Seasonality: If your sales dip in certain months, factor that into your plan.
Update Frequently: Revise your forecast when you have new data, like a sudden jump in sales or a large unexpected expense.
Example in Action: If your monthly revenue averages $10,000, but you know February is slower at $8,000, a cash flow forecast helps you plan around the $2,000 shortfall. You can adjust your spending or run a targeted promotion in January to offset the expected dip.
7. Optimize Your Pricing Strategy
Why It Matters: Finding the right price point can significantly impact profitability. Price too high, and you risk losing customers; price too low, and you erode profits.
How To Do It:
Review Your Costs: Know exactly what each product costs you to source and ship.
Test Small Increases: A small incremental price hike may boost your profit margin without deterring buyers.
Keep an Eye on Competitors: Benchmark your prices against similar products. If the competition charges more, you might have room to increase your prices.
Example in Action: If you sell a product at $35 and your landed cost is $20, your profit is $15 per sale. Raising the price to $37 boosts profit to $17—an extra $2 per unit. Multiply that by 1,000 sales, and you gain an additional $2,000 annually.
8. Explore Outsourcing Opportunities
Why It Matters: You only have so many hours in the day. Delegating administrative or specialized tasks lets you focus on the revenue-generating activities you do best.
How To Do It:
Identify Time-Consuming Tasks: Bookkeeping, customer support, and social media management are common bottlenecks.
Research Reputable Providers: Look for virtual assistants, bookkeeping services, or agencies with strong client testimonials.
Set Clear Expectations: Define roles, deliverables, and performance metrics for anyone you hire or contract.
Example in Action: If you spend 10 hours a month reconciling transactions, outsourcing that job at $300 per month might free you to focus on a marketing strategy that could bring in another $1,000 in sales. That’s a net gain and less stress.
9. Schedule Quarterly Financial Check-Ups
Why It Matters: Business conditions can change quickly, and a quarterly review helps you course-correct before small issues become major problems.
How To Do It:
Review Financial Statements: Examine your Income Statement, Balance Sheet, and Cash Flow Statement every quarter.
Compare Against Forecasts: Check whether you’re hitting or missing your revenue and profit goals.
Identify Trends: Spot patterns in customer behavior, sales channels, or seasonal fluctuations.
Example in Action: If Q1 sales are 15% below your projection, investigate why. Maybe marketing spend was too low or you had inventory delays. Correcting the issue quickly can set the tone for a stronger Q2 and beyond.
10. Build a Solid Tax Strategy
Why It Matters: Staying on top of your tax obligations throughout the year can save you from scrambling (and overspending) in April—or whenever your filing deadlines hit.
How To Do It:
Know Your Deadlines: Mark calendar reminders for sales tax filings and income tax due dates.
Track Deductible Expenses: Advertising, software subscriptions, shipping expenses, and other business-related costs may be deductible.
Seek Professional Help: Tax regulations change constantly. An accountant or tax advisor with e-commerce expertise can help you capture every deduction to reduce your taxable income legally.
Example in Action: If you grossed $200,000 in sales but had $120,000 in deductible expenses (like advertising, shipping, and home office costs), you’d only be taxed on $80,000 of profit. Proper documentation of each expense throughout the year ensures you don’t miss any deductions.
Putting It All Together
These ten resolutions serve as a roadmap to strengthen your Shopify store’s financial foundation. From meticulous planning and consistent cash flow forecasting to strategic tax preparation, each step reinforces what Proverbs 21:5 teaches us—that diligent, thoughtful work leads to abundance.
This new year, commit to these principles and revisit them regularly. By doing so, you’re positioning your Shopify business to thrive not just this year, but for many years to come.
“If you have any questions or need personalized help, don’t hesitate to reach out. Schedule a call with Jacob by going to https://www.jacobcurtiscpa.com/7-shopify-mistakes-calendar. We're here to help you piece together financial freedom.”
Comments