When it comes to managing your personal finances, there are various tips and tools for managing your money and improving your financial situation. For example, you could set yourself a strict budget or cut back on non-essential spending. However, business funding and finances can be a little harder to manage - especially in the early days.
With that in mind, here are some top tips to improve your company's finances.
- Before launching your company, make sure you have enough cash to hit the ground running. You may be relying on personal savings, or you may be borrowing money from friends, family or from your business bank. Either way, you need enough money to support your company for the first few months. This allows you to invest your time and efforts into running the business without having to worry about your finances at every twist and turn. You might consider ways you can boost your reserves to provide a little extra financial security. You might invest in stocks or look to attract investors.
- Make your business more attractive to investors. Investing in a new business always has an element of risk. You need to give investors a reason to trust you. A robust business plan will support your claims and demonstrate that you have more than just a 'good idea'. Your plan should detail how the business can grow to improve the likelihood of attracting money or support. Make sure you target the right kind of investor with experience in your chosen industry.
- Use a budgeting checklist to keep track of your spending and ensure you are allocating your money appropriately across each aspect of your business. Setting and monitoring a budget reduces the chances of overspending in non-essential areas or those that do not drive growth.
- Take a DIY approach where possible. For example, if you can't afford to hire a graphic designer, try one of the free online options such as Canva to create a logo, design your website or create content for your social media account. Using free software and apps is a great way to give your small business a professional image until you can afford to expand your team or outsource the creative work.
- Find ways to improve your company's cash flow. For example, if you're constantly chasing late payments, you may need to make it easier for customers to pay you. You could take payments via PayPal or use one of the many small business invoicing apps that make it easy for customers to pay immediately. Consider offering customers the option of staged payments, making large sums easier for customers to manage while ensuring you receive the appropriate compensation for your work.
- Make sure your products and services are appropriately priced. Overcharging will put potential customers off and can lead to poor levels of customer satisfaction if they feel they have been overcharged. Conversely, undercharging can mean you don't cover your overheads, or your products are wrongly perceived as poor quality and you limit your company's success.
- Many companies haemorrhage money due to a lack of efficiency. For example, when employees waste hours completing routine tasks instead of doing the job they were hired for. Consider outsourcing routine tasks, implement technology such as chatbots that can answer simple customer enquiries and eliminate repetitive tasks so employees can focus on what they are good at.
- Make sure you keep on top of your tax and national insurance liabilities so you know exactly what you owe and when so you don't land yourself in a tricky situation further down the line. nvest in new technology and software that makes your job easier. For example, if you run a shop, invest in software that allows you to keep track of stock and track customer orders, so you don't have to complete these tasks manually. This saves time, which in turn will save you money.
- Complete thorough market research before launching a new product or service, to ensure there's demand and space in the market for it. This increases the chances of your product launch being successful. One way you can do this is by hosting a series of focus groups with your target audience, alongside market research on other similar products already on the market.
- Negotiate with your suppliers so you stay within budget when manufacturing new products or increasing your stock. Using the right supplier can make the difference between saving money and spending it unnecessarily. That said, it's important that you don't cut corners. Your product will only be as good as the component parts or ingredients. Cheaply produced products will not be as long-lasting and are more likely to result in customer complaints or refund requests.
- Consider hiring an accountant who can help you track and reduce your spending. While this may seem like an additional expense, it will soon prove to be an invaluable company asset when you start to reap the savings.
In short, there are various ways you can improve your company's finances - which in turn, will allow your business to reach the next level. Perhaps the most important step is treating your finances as a priority, as opposed to a burden that you stick at the bottom of your to-do list. After all, managing your finances sooner rather than later will provide you with greater financial security and confidence.
Copyright 2021. This article was made possible by Jeremy Bowler.