Practically every small business owner constantly worries about finance management, wondering whether or not they’ll have enough money to keep their business afloat.
Of course, when you’re trying to build a successful business model, the money managing processes you instill are equally as important as strategies you’re using.
When it’s all said and done, money management is simply not easy, no matter how much effort you put in. Below, you can find five tips that will help you manage your funds properly.
Don’t borrow money unless necessary
More than 70% of SMB owners in the United States seemingly have sufficient access to lines of credit. However, around 45% of them cite lack of cash flow as their main concern, according to a recent Bank of America survey.
Today, so many non-traditional lenders provide small businesses in the US access to short-term capital. But you have to be aware of the fact that this borrowing may cost you a lot. Therefore, manage your cash flow on a consistent basis with payment systems, which will allow you to support consistent cash flow.
You’ll have to pay a nominal fee to use this technology, it’s generally less expensive than interest rates associated with borrowing money when your resources are constrained.
Pay attention to the sales cycle
During the course of the year, your business will go through busy and sluggish periods. Your business will have an offseason every now and then, so you have to account for expenses during that period. You should use this time to make plans for your next busy period.
You can use this time to revise your marketing and finance strategy for the next few months. If you want to keep the company thriving after a slow few months, you have to think about new and creative ways to market your product to potential customers.
Moreover, you should also prepare for this slow period in advance by saving an extra few dollars in the bank. It’s best to both cut down on your costs and have some money stashed away, just in case your profit is slightly lower than you expected.
Use SMB finance software
A vast majority of SMB owners have a lot of trouble with tax preparation and accounting every year. As a matter of fact, according to statistics gathered by the PRNewswire, nearly 33% of small business owners spend up to $5,000 per year on tax administration, internal costs and tax fees.
So, if you want to save some money, you should invest in proper software that will allow you to automate time-consuming processes like expense reports, bill payment and invoicing.
Furthermore, if you want, you can also automate more advanced tasks as well. For instance, if you’re using a subscription business model, you can find a recurring payment system that will cut your invoicing time, deliver deposits on time and in turn, allow you to manage your cash flow properly.
Always have a backup in place
Today, we keep most of our files stored on hard drives. That’s why, in case something unexpected happens, you should have a backup in place. This might not seem like a financial problem at first, but keep this in mind: an average cost of each lost confidential record is roughly $154.
Losing all of your financial information, customer data or anything else important will definitely cost you a ton of money in the long run.
On one hand, you should start using the cloud to store your information as soon as possible. However, even then, unforeseen outages and data breaches can occur, so it would be wise to back up your files regularly to make sure that everything is completely secure.
Spend your money on the right people
Lastly, no matter how much money you spend on software or how much effort you’ve put in educating your staff, if you don’t have the right people to help you with your business operations, it’s all basically worthless.
This is especially important when talking about financial software. As Forbes reports, one of the biggest mistakes small business managers make when it comes to financial software is not hiring the right people to run it.
You should dedicate some additional time to finding and hiring more experienced employees who can minimize mistakes and simplify your business operations as a whole.
The bottom line
All of these tips will help you manage your cash flow more efficiently, however, if you really want to improve your money managing skills, you should analyze your own characteristics. By doing this, you’ll be able to minimize your weaknesses and improve your money management strengths.