SMALL businesses are being urged to review their finances as they start planning for a successful 2007.

With consumer debt at an all time high, interest rates rising, energy prices high and the exchequer borrowing to finance a bulging deficit, the outlook is not as rosy as some might hope.

Lesley Cozens, managing partner at Yorkshire Bank's financial solutions centre in Manchester, says now is a good time for businesses to review plans and strategic goals.

Here is the bank's 10 top tips for small businesses:

1) Ensure borrowing is structured to cope with any increase in interest rates.

2) Plan for energy and variable cost fluctuation - continued uncertainty in the Middle East and Russian energy markets, plus debate over minimum wage rises could hit small to medium enterprise's hard if unprepared.

3) If your business could be at risk from currency or interest rate fluctuations, consider hedging. Hedging is the process of managing the price risk inherent in a business, by offsetting that risk in some way.

Although the pound is nearly at the magic $2 rate, it is expected to strengthen in 2007.

For a business, managing price risk means maintaining greater control of either the cost of inputs, or revenues from sales, or both. Through hedging, organisations are better able to plan for the future based on assured costs or revenues.

4) Green might be expensive - but not being green might be more so. With politicians on all sides singing from the green hymn sheet, expect local and national green taxes to be high on the agenda in May's local elections.

5) Are your liquid assets working as hard for you as they could be? With interest rates buoyant, and the dollar continuing to decline in value against sterling, your businesses could be doing a lot with its cash to increase the value of its net worth.

6) Set achievable goals. Businesses and individuals all benefit from this. Don't set unrealistic goals as it will lead to disappointment, frustration and heartache.

7) Deal with your debtors. Too many businesses, even when they cannot afford it, don't chase debtors hard enough or early enough.

No-one wants to offend customers but credit control is crucial. Someone within your business should have responsibility for chasing bad debt. Act early and decisively.

8) Proactive and effective customer communication. Is there untapped potential in your existing customer base? Are they fully aware of all the products and services you offer? There is no easier way to expand and drive profits than by selling more to those you already deal with.

9) Don't be afraid of change. Successful businesses are those that continually innovate and shape the markets they operate in, rather than letting the market dictate their business.

10) Take advice. By bringing in a fresh pair of eyes to view your finances, 2007's challenges will be easier to overcome. Tweet