If there is one area that cannot be overlooked in terms of your business and everything that it is doing, it is certainly going to be your financial situation. Otherwise, you can easily find yourself in a situation in which you are struggling to make ends meet and hit all of your cost targets – without even mentioning the clear and obvious need to spin a profit at all times. How can you have better control over the financial situation at your company? In truth, there are all sorts of different areas that you can focus on, but this blog post will be looking at just a few of them in a higher level of detail.
Ultimately, the advice here will be written in general terms, but it can certainly be applied no matter whether you are running a small or a large enterprise. The basics of financial business management do not change, but sometimes when a company grows and develops, the basics start to get sadly lost, and your company can suffer as a direct result of this. Therefore, here are a few of the main components of a clear and obvious financial strategy that you can utilize to your advantage.
Refer Back to Your Business Plan
To begin with, you should have created a business plan that includes your financial projections within it. If you do not have a document of this type, it is certainly going to be worth doing something about it. You need to have your current financial situation noted down in detail, as well as the direction of travel that you are hoping to embark upon. Ultimately, while all of your predictions may not come to fruition in the end, the very fact that you have considered them in a close level of detail is a vital starting point. A business plan should be a fluid document that is always changing and ready to be updated as and when necessary.
Keep a Close Eye on Your Finances
While it may seem like it is an obvious enough point to make, if you do not keep a close eye on your financial situation, it is all too easy to find yourself in a position in which you are struggling. This is largely down to the fact that they can easily start to spiral out of control right under your nose. If you have a high level of awareness of your costs and expenditures, it is going to be much more likely that you will be able to reign them back under your sphere of influence. You should also review your current position against your business plan to see how the two are measuring up. At the same time, it is also worth understanding your financial situation in more detail, and the best way of doing this is by taking on a qualification such as an MBA finance online. While it may seem like you do not need to take this step if you outsource your finances anyway, you should have control of your company and not leave it to other people while having no real idea what is going on.
Make Sure Customers Continue to Pay On Time
The best way of making sure that cash is constantly flowing into your business is by monitoring your customers and always ensuring that they are paying on time – all the time. If you have a finance department, it is often left to them to chase up any unpaid invoices, but there is no doubt that a lot can be said for offering incentives for early payment. You should also keep a close eye on which customers are always paying on time and which ones always have to be chased. This can give you a much better idea of who you should be continuing to do business with and who cannot be offered the same level of trust. As well as this, you need to make sure that your credit terms and your payment expectations are made clear right from the start. This is certainly going to help out a great deal in terms of reducing any type of confusion that may otherwise occur.
Understand Your Daily Costs (and Take Steps to Cut Them Back)
This is a subject that has already been touched upon in other parts of the blog post, but there is no doubt that a better understanding of your daily costs can go a long way. This should be split up into your essentials and your non-essentials. However, it is a misconception to think that it is only the latter column that has the option to be cut. There is certainly a lot that you can do in the former column as well. For example, are you spending too much on your rent, and you would be better off in another office? However, it does not have to be as complicated as all this. You could also look to see if you are simply paying too much for your energy bills, and there is another provider that is going to be willing and able to offer you a better deal than the one that you are getting already. As for your non-essentials column, there should be plenty that you can do on this front – and this certainly starts by looking at any wastage that is occurring at your company. For example, is there a subscription that you are paying for but simply not using at all? This should be an area that is ripe for cutting straight away.
Keep Your Accounting Details Up to Date
The refreshing of your accounting details can prove to be invaluable, and you certainly do not want to reach a situation in which you do not have a real idea of what is going on here. To begin with, you could be failing to keep your business afloat in cash-flow terms as you are not keeping up with late customer payments. Alternatively, it could be your outgoing costs that are in trouble, and you are simply not sure when you should be paying your suppliers. As a result, you could end up being hit with late payment charges that could have otherwise been avoided. You should have a good quality record-keeping system in place as you will be able to do a lot in terms of tracking your expenses, keeping a close eye on your debts, applying for any additional funding that you may need, saving time, and cutting your accountancy costs as well.
Meet All of Your Tax Deadlines and Other Responsibilities
It is going to be your responsibility that you need to pay your bills on time, and this is also true of your tax responsibilities. There is simply no point in getting into a situation in which are building up any late payments that could have otherwise been avoided. If you are running a small company, more of the financial responsibility may fall on your shoulders in terms of making sure that you always hit your deadlines. At the same time, you should not simply allow all of this to be outsourced without any idea of what is going on. Otherwise, you can end up in a situation in which other people are making mistakes, but you are the one who is having to pay the price.
Run Your Business in a More Efficient Manner
Again, this is an area that has been discussed in a higher level of detail already, but there is no doubt that you can get a lot in terms of your financial situation from running your business in a more efficient manner. This means keeping a close eye on each and every one of your overheads and working out the ways in which they are not going to risk spiraling out of control. There are plenty of different areas that spring up and are amongst the most obvious, including office equipment, lighting, heating, air conditioning, etc. One way of cutting your costs is by simply using less of it all and working down your energy bills in this way. At the same time, you can also look to your suppliers to work out whether or not they are providing you with the very best deal or if you could do better elsewhere.
Look at Your Price Points
The amount that you are bringing into your business is obviously going to be directly impacted by the price that you are charging for your products and services. Therefore, there is certainly a lot to be said for reviewing your price point to see where you are positioned in terms of the market as a whole. For example, are you at the cheaper or, the more expensive end of things? Are you making enough to cover your costs and spin a profit? In an age when many bills are quickly skyrocketing out of control, you should be in a situation in which you are constantly looking back at your current price to check whether or not it is actually viable for your company. You also need to think about your price in terms of any times of the year in which you will be holding sales, and you may be offering customer discounts. Think about which products and services are selling nicely and which ones are setting you back more than is strictly necessary.
Control Your Levels of Stock
If you are in the product business, you certainly need to be in a situation in which you are checking your stock levels and ensuring that you are not going to be throwing away a big percentage of your merchandise due to expiration or an overstocking situation. You do not want to get your stock tied up in storage space that you are paying for but not really needing and using to its best levels. If you control your stock levels better, you are clearly going to find yourself in a situation in which you will free up some cash for your company while always ensuring that you have the right levels of stock. Ultimately, it is worth looking back to the management systems that you already have in place to work out whether or not these are serving you well enough.
Work Out Your Business Funding Situation
How is it that your business is funded? It may well be the case that you are going to need to discover different ways in which you can keep your responsibilities in terms of debt repayments. For example, it could be that you have very clear repayment targets that you need to make. Even if you have received loans from friends and family to open your company, you still want to make sure that you are communicating with them about when they can expect to be paid back again. If you are going to need to apply for any additional funding in the near future, it is certainly worth putting yourself in a situation in which you are fully comfortable with your ability to pay it all back again. If you are running a smaller company, you may well be able to find funding that you did not even know existed, so this is always going to be worth looking into.
Make Sure to Tackle Any Problems Head-On
While financial problems in a business can be highly stressful, this does not mean that you should simply bury your head in the sand if they occur. Actually, this will have the opposite effect to the one that you were intending, and it can easily be the case that problems start to multiply and get worse if you are not careful. Therefore, there is certainly a lot to be said for being as direct as you possibly can be on this front.
These are some of the financial components that will help you to run a business that not only stays afloat from a financial perspective but actively thrives and turns a profit.