Getting a grip on the cash flow of your small business is vital to its success and longevity. Lack of available funding is often cited as one of the main reasons for the demise of small businesses, and with the failure rate currently standing at around 50% in the first year of trading, the last thing you want to do is to join that statistic.
If you don’t have a handle on finances with no real grasp of where it’s going you can expect to lose money fast. Having a clear idea of your income and expenditure is vital to enable you to make the most of what you have and avoid wasting any of it.
Hire Professionals
In the first instance, if you cannot review the figures yourself, hire someone who can. Get a bookkeeper or accountant to help you organise your finances, look at where your money is going, and identify areas of loss and waste. Once you have the correct information collated, you can implement changes and monitor your spending going forward.
On top of this, if you feel you are stagnating, talk to a business advisor or mentor in your industry who can assist you with common problems and roadblocks and give you ideas on how to get back on track. Business mentors will have already experienced the highs and lows and made their mistakes as they can advise you on how to best forge a path forward without making the same ones too.
Make A Plan
Every good idea starts with a plan or something to that effect. If you don’t have an idea of where your business is going or what you want from it, then you cannot even begin to get things under control financially. You must ensure that you have goals and targets in mind and implement spending controls and investment as a company to support those plans.
Look at where you are now, and compare this to your original business plan. Assess your goals and progress, map out how you need to go from where you are now to where you want to be and continue to implement changes to achieve this.
Make Savings
Knowing how much you are spending and where is vital. Some areas must be invested in continually, while others can simply be streamlined to make them more cost-effective. Look at all of your outgoings and determine if you can and if you should make changes. It can be something as simple as looking at your shipping costs to determine the appropriate freight class for your shipment and avoid paying high fees for shipping, or it can be reevaluating how you utilise your employees to make them work more efficiently and get the best from them during their working day. Constant changes need to be reviewed and implemented so your business operates efficiently and minimises waste. Look at every single aspect of your business and be ruthless, if necessary. But remember, don’t sacrifice quality, or you will do more harm than good.
Conclusion
Evaluating and organising your finances carefully can be instrumental in achieving success and avoiding failure of your business. If you want to pursue the former and avoid the latter, you also need to be proactive when it comes to your sales growth and ensure the figures are heading in the right direction to sustain your ideas and long-term business future.