6 helpful ways to improve the financial health of your small business
By Shannon Ash, Rogerwilco - Sep 28th 2018, 10:41
Starting, owning and running a business is financially taxing. It can become overwhelming overnight, and if you’re not constantly monitoring your financial status, you’re falling behind.
Financial management is critical as it allows you to see and change what you’re overspending on, and what you need to do to improve your bottom line. In order to keep your financial health in check, you need to have the courage to change what isn’t working. So, if you think you need to review your goals, here are a few tips to consider:
Analyse your cash flow
Small business owners can find out everything they need to know about their financial status simply by checking the cash flow in their business. As the owner of a startup or a small business, you need to monitor your revenue on a regular basis. These numbers will give you a clear indication of where you’re overspending, what you need to focus on and what gives you more headaches than it should.
Based on this analysis, you will be able to eliminate processes outside of your business model which could save you money. You will be able to see what is coming in versus what is going out, and for what purpose money is being spent. These reports can be pulled by financial software, and of course, having an accountant who can guide you on your spending habits will add value to this activity. Once you have a better understanding of your numbers, you will be able to tweak your model accordingly.
Reduce your expenses
You might have started your business and progressed quickly, giving you the financial freedom to purchase new equipment and make big financial changes in your business environment. While it’s all good and well when things are running smoothly, when the economy is down and your turnover rate starts to dip, it can be worrisome. For this exact reason, it’s absolutely essential for businesses to have goals, objectives and long-term plans. Overspending can put you in debt and your employees at risk.
Finding ways to boost your sales is the first thing that springs to mind in this scenario, but reducing your expenses will be a step in the right direction. Use a calculator to eliminate costs on the resources that are not aligned with your goals. You can also do this by choosing new suppliers to work with.
Do credit checks on clients
A lot of the time, companies lose money because they don’t follow up on payments immediately. They also create close relationships with their clients or suppliers that make it harder to force payment if they need some extra time to gather their money. So, going forward, a great way to solve slow payment is to run credit checks on clients before accepting and delivering a job. There is no point pushing production on a job that hasn’t been paid for. Unfortunately, you need to be 100 percent clear with your payment policy. Make sure that billing and invoicing are done properly, and if payments have not been received, chase the client or supplier immediately. It’s absolutely critical to be up to date with your business’ finances.
Review your insurance options
As you know, owning a business requires you to purchase a variety of different insurance policies. From equipment to property, workers compensation and more, you need to ensure your business is healthy in the event of an unforeseen event. However, sometimes these policies come at a steep price, and you simply chose them in a rush previously. It’s important to sit down and analyse each policy that you’ve signed up for, and if something is not worthwhile, cancel your contract. If everything is important that you have, consider looking at a competitor’s pricing to see if you could save on insurance products.
Revisit your growth strategy
Every business needs to have a plan. Be it a five-year plan or a ten-year plan. You need to know what you are moving towards. Each year offers new financial and external challenges that you cannot always have control over. What you can do, however, is have a clear understanding of what your goals are and how you’re going to achieve them. Look at your products and services and think about ways in which you can improve, based on recent insights and market experience. Try to align your financial goals with your updated business and expenses strategy, employee growth plan and more.
Think about financial assistance
If your spending habits or lack of consistent business opportunities have landed you up in a financial pickle, think about finding a finance broker who can assist you with a loan. When thinking about purchasing new equipment to grow your business and using an online finance calculator, the repayment and number of payments will be made clear. And, based on that amount, you will be able to apply for the loan you need to keep your business healthy. With access to the right tools and knowledge, you will be able to make smarter financial decisions for your future.
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