In a year when, despite the increasing reports of economic recovery, small businesses all over the UK are struggling to access the finance they need, has there ever been a more critical time for small business owners to be thinking about managing their money better? If you find your company’s funds running low, costs mounting higher than forecast or the limits of your budget straining to burst, it’s time you assessed your business’ finances.
A global survey conducted by Reuters found that women have more confidence in their ability to deal with money than men, so whilst it seems we’re predisposed to manage the finances of our businesses well it’s just a matter of getting things in order.
Addressing your expenses
One of the most practical ways to save money is to assess your business’ expenses. It’s often the route that springs to mind first, and for a good reason – in any size business, there are a huge number of expenses that can be minimised or even cut out completely.
Printed promotional material, for instance, is often necessary and usually expensive; look at various providers to see which offers the best value for money. If you’re handing out leaflets, consider channelling most of your focus into social media instead – at least until your company is bigger and in a position to bolster the social media strategy with other marketing routes.
This is also true for energy usage. It’s easy to forget that bills need to be paid for the lights to come on and machines to work; after all, a business owner has so many more pressing concerns to address every day. Just like most of us do at home, make sure nothing is left switched on that doesn’t need to be, and explore the tariffs available to make sure your business is receiving the cheapest energy.
You should also look at how your company handles petty cash. Small costs can quickly snowball over the space of a few months and get out of hand, so it’s beneficial to set out clear guidelines about what can be bought with petty cash and what can be avoided to cut out unnecessary spending.
All that said, it’s not all about directly minimising actual costs. Streamlining processes, assessing procedures to see if any of the smaller day-to-day tasks can be carried out in a more efficient way, will save time in the long run that can be directed into other areas of the business.
Streamlining your cash flow
Cash flow represents the blood of the business. When it slows up, companies can face a wealth of issues, including shortages in funds that can lead to demoralised staff and dissatisfied clients. If your cash flow problems have arisen from your customers delaying payment of their invoices, try offering discounts or other advantages on early payments going forward, encouraging them to settle their debts early on.
Something else to consider is the period allowed for settling your own debts. Although it’s not ideal in the long run, it can certainly help in the short term to assess your payment terms and identify the latest you can pay. Just make sure you don’t miss any payments – it’s never worth it.
Women have the advantage
Businesswomen in all sectors are in a position to get their finances on track and pave the way to success, as various studies suggest that we are better at managing our money than men.
Lovemoney.com, for instance, carried out a survey which found that British women have a lower average debt on their credit cards, and are less likely than men to rely on credit when buying gadgets, suggesting we command a greater awareness of how much money is available to us and how to use it sensibly. Additionally, the women who took part in the survey showed a greater propensity towards paying their credit card bill on time.
It’s great if you have fantastic ideas for future products or services and clear visions about where your business is going, but if you neglect to consider the financial side of things, your company simply won’t have the capacity to achieve the goals on which you have set your sights.