If you’re running a small business, your profit margins really matter. So, it’s important you know you’re not wasting money on anything your business doesn’t absolutely need. Here are a handful of key financial resolutions your business should be putting into practice this year.
Cut back on unnecessary spending
First, take a close look at what’s coming out of your business bank account. If you see lost dollars on coffees, expensive taxi cabs or even subscriptions to services you’re not using very often, cut back. Cancel your subscriptions (or downgrade your package), and swap your expensive coffee habit for a cup you can refill on the move.
Plan travel ahead, use public transport where you can, or share the cost of car hires with colleagues so that trips away from the office become cheaper. Use free business apps instead of paid ones. There is always a a free option you can consider for your business or team.
Improve your cash flow
Everyone knows that cash is king in any business, but that’s particularly true for small businesses. So, to improve your cash flow, you’re going to need to be proactive about it:
1. Map out your forecasts week by week so you can plan for spikes in expenses or dry periods.
2. Check to see if your suppliers’ payment terms are standard for the industry you’re operating in.
3. Examine where your cash goes. Is lots of cash tied up with suppliers, or are your customers bad at paying on time?
4. Establish a debt chasing procedure. If your customer is supposed to pay within 30 days but they still haven’t by day 31, pick up the phone. You can’t afford to be ‘floating’ anyone.
5. Hire equipment and lease office space. Making big purchases up front can swallow up a lot of cash.
Use web conferencing technology more often
It’s true that it’s sometimes better to meet clients and suppliers in person. However, it’s possible (or it won’t damage your business’s relationships), to reduce the frequency of your face to face meetings in favour of using web conferencing technology. You can conduct meetings and share screens, or you could even just use FaceTime or Skype to chat. This will save your business travel time and unnecessary expenditure.
Guard against fraud
Another important financial resolution small businesses should be making is to invest in materials that guard against fraud. 1 in 5 small businesses in America are victims of fraud, losing an average of $6,200 to scammers. However, there are tools to help small businesses stay safe. For example, you can use fraud-proof checks when paying suppliers and employees, as well as security pens to guard against check washing.
Be prepared to pay for what counts
As well as reducing expenses, one of your financial resolutions should be to spend money where it counts. Don’t compromise on quality and great customer service. For example, don’t skimp on the essentials such as a high-quality website. Your website is the first impression many of your customers will have of your business, so it’s wise to pay for a website that ticks all the boxes on the design and functionality front. Investing money where it counts will hopefully help your business to make more money in the long-run.