Something that all successful small and medium enterprises have in common is good management of their finances. Staying ahead of your business finances could mean the difference between a fruitful future and insolvency.
It can be difficult to maintain a regular schedule for bookkeeping and other financial duties, but it is crucial if you wish to remain solvent.
Consider alternative funding sources
It is well documented that it can be incredibly difficult for a small business to secure finance, particularly if it is a start-up and doesn’t have a proven track record. However, there are other ways to obtain finance other than a traditional bank loan. If it isn’t possible to borrow from friends or family, consider angel investors or crowdfunding. This involves many people investing in your company, often in return for shares in the business, known as equity crowdfunding. Angel investors use their own finances and expertise to help a business grow, again in return for a share in the company.
Financial management
Accountancy outsourcing will provide an overview of your finances on a daily, weekly and monthly basis. A professional will be able to maintain up-to-date records so that you know exactly where you stand at any point in the business. Cash flow is crucial for business success, and has to be managed closely. In addition to making payments promptly, you should also collect outstanding payments as soon as possible.
Cut costs
Keeping costs as low as possible and reducing waste will help you to develop a profitable venture. It is no use obtaining funding if you are wasting money elsewhere. Check your overheads, running costs, expenditure and all items you spend money on, making cuts where possible. By reducing costs, you may not need to secure finance after all.
Organise any business debt
Most companies find themselves with some debt, which needs to be paid off as soon as possible. If you are faced with debt that looks to be approaching an unmanageable level, contact the creditors and arrange a payment schedule or to reduce the interest payable. Negotiating with creditors could provide extra time to pay off the debts.
If finances aren’t your strong point, consult with a professional who will be able to advise. Outsourcing is often the most cost-effective way to manage finances without running into difficulty. For advice or information about outsourcing, give us a call.