Sales figures don’t always tell the whole story about a small business’s financial health. In many cases, other factors influence a business’s ability to stay in the black, and it often boils down to poor money management. If your business isn’t always financially stable, put these five money management strategies to use.
Appoint a Dedicated Bookkeeper
Image via Flickr by anka.albrecht
Regardless of your business’s size, you need at least one person to take control over bookkeeping. He or she could be an owner, an accountant, or an AR/AP specialist. The bookkeeper maintains the company ledger, generates regular financial reports, and conducts internal audits. If you pass the ledger around, you risk missing important details or mistakes that could jeopardize your business’s financial future.
Resist the Urge to Add Staff
According to Accounting Web, many small business overstaff themselves too early. You might think you need more sales professionals or a bigger marketing team, but expenses like salaries and benefits add up. It’s better to wait until you can’t run the business without hiring extra people.
Practice Frugality in Both Your Personal Life and in Business
Whether you’re taking out an Avant personal loan or balancing your checkbook, exercise frugality no matter what the situation. If you’re behind on your mortgage and collapsing under the weight of copious credit card debt at home, you’ll translate those practices to your business.
If you decide to apply for a loan, shop for the best interest rates and most forgiving repayment plans. When you need new equipment for your business, compare different vendors based on quality and cost. Pay attention to the numbers when you acquire new merchandise or pay your utility bills, and take every opportunity to save cash.
Recognize Seasonal Trends
Every business experiences peaks and valleys in cash flow. Retail businesses, for instance, often see sales spikes during the holiday season, but might not sell as much over the summer when their customers go on vacation. Similarly, accounting firms do the most business during tax season.
If you recognize your seasonal trends, you can prepare for them fiscally. For instance, you might hire temporary workers to staff your business during busy months. That way, you don’t have to continue paying their salaries when sales drop again. You can also budget your money holistically so you don’t overspend when sales figures suggest you’re earning more money.
Accept Multiple Forms of Payment
Many people don’t carry cash when they hit the mall for a shopping spree or carry their checkbooks when they visit the supermarket. While accepting debit and credit cards might require you to pay merchant account fees, you’ll benefit from increased accessibility.
The added cash flow will compensate for merchant account fees and endear you to your customers. You can also consider accepting online payments so customers who don’t visit your physical location can still avail themselves of your products or services.
Maintaining a financially sound business takes considerable effort, but it keeps your enterprise afloat. Focus on developing healthy money management strategies if you want to succeed in business.