Good financial management is crucial to the success of any business. After all, a company is only as strong as its bottom line. According to a report by the Bureau of Labor Statistics, about 20 percent of small businesses fail during their first year. And among the most common reasons cited for failure is poor money management.
So, if you want to keep your business in the black, you need to be smart about how you control your finances. Here are some tips on how to do just that.
Use finance management tools
Tracking finances play a crucial role in keeping a business afloat. After all, you can’t manage what you don’t measure. However, studies have shown that 61 percent of companies struggle in this department.
Fortunately, plenty of excellent finance management tools are available to help small businesses stay on top of their finances. QuickBooks and FreshBooks are two popular options. These tools can help you manage your expenses, invoicing, and payroll. Having everything in one place will make it easier to see where your money is going and make better decisions about where to cut costs.
Using these tools, you can get a clear picture of your financial situation and make informed decisions about improving it. It’s definitely worth the investment.
Identify your workflow expenses
Your business likely has many moving parts, requiring specific materials and services to function correctly. That’s why you must closely examine your workflow and identify which expenses are essential and which could be cut or reduced.
For example, if you’re a web design company, you may need expensive design software, but you probably don’t need an office space downtown. On the other hand, if you’re a brick-and-mortar store, you’ll need to factor in the cost of things like rent, utilities, and inventory.
Every business is different, so it’s essential to tailor your workflow analysis to yours. Once you’ve pinpointed which expenses are necessary and could be cut, you can start making changes that will save you money in the long run. Workflow expenses can add up quickly, so being strategic about what you’re spending your money on is your best choice.
Invest in a business establishment
Investing in a physical space for your business can be a great way to control your finances. When you have your own space, you have more flexibility with how you use it and how much you spend on your payments. Plus, having a physical space can make your business feel more legitimate in the eyes of customers and suppliers alike.
But many businesses skip this part because they believe it’s cheaper to rent a small space month-to-month. However, owning your space can save you money in the long run. You won’t have to worry about landlords hiking up the rent or subletting to another tenant.
More so, many are taken aback due to the high upfront costs. This part is where mortgage lenders come in. These companies offer personalized commercial real estate loans for business owners who want to invest in their own space.
In doing so, you’ll have more control over your finances and will be able to build equity in your business. It’s a smart way to invest in your company’s future.
Negotiate with suppliers
If you’re not happy with the prices your current suppliers are charging, don’t hesitate to reach out and negotiate for better terms. It never hurts to ask; you may be surprised at how willing they are to work with you.
However, be careful not to sacrifice quality for the price. Finding a balance that works for you and your supplier is essential. If you’re not happy with the products or services you’re getting, it’s probably not worth it to save a few dollars.
But if you can find a supplier who offers high-quality goods at a fair price, you’ll be in good shape. Negotiating with your suppliers is a great way to save money and get better terms for your business.
Expand your brand offerings
Adding new products or services to your brand repertoire is a great way to generate additional revenue streams without breaking the bank on advertising or marketing costs.
That means you can offer your customers more without spending more money to reach them. And when you can provide more, you can charge more—giving you a higher profit margin. Of course, expanding your brand isn’t something you should do willy-nilly. You need to be strategic about it and make sure the products or services you’re adding are things your customers actually want. Otherwise, you’ll end up wasting time and money on something that doesn’t benefit your business. But if done correctly, expanding your brand offerings can boost your bottom line without putting strain on other areas of your business finances.
When it comes down to it, managing your business finances is all about being smart and strategic about where you spend your money. By using the above tips, you can keep more money in your pocket and put your business on the path to success.