Finance and money management is particularly important for new and growing businesses. Money flow can be a problem even when a small business has numerous clients, offers a product superior to that offered by its competitors, and enjoys a sterling reputation in its industry. Companies suffering from money problems have no margin of safety in case of unanticipated expenses. They also may experience trouble in finding the funds for innovation or expansion. It is, somewhat ironically, easier to borrow money when you have money.
Keeping on top of your business finances, whatever industry you are in, is essential and allows you to keep abreast of what is going in and out of your business.
If you haven’t really had a marketing budget before but have some cash aside that you could use to help promote you better, start by doing a bit of market research into where your target audience digests their daily news, whether they spend their time on social media, what offline publications they read. This will allow you to look at advertising costs or ways in which you can target your market.
You can always use a ledger to keep track of your income and expenses. But with the variety of high quality, low cost, or even free software options, there is no need to try to save a few pennies and do the work by hand. Software is often quicker, easier, and more accurate than pen and paper.
New internal systems help you to work more cost effectively if you were to make the purchase? Sometimes, investment into technology – while sometimes expensive – can be more worthwhile in the long run.
Using technology to manage cash flows is one of the most obvious ways to enhance efficiency. Dropbox, Quickbooks, Google Drive, and Xero all offer great services and cloud-stored accounting software that will help you manage your cash professionally. Some of these services are free, but if you don’t know your way around basic accounting concepts it’s best to pay a professional or buy a premium software package.
If you need more cash, it seems like a no brainer to go out and try to attract new customers or sell additional goods or services to your existing customers. But this may be easier said than done. New customer acquisition is essential to a growing business, but it can take time and money to convert prospects into sales. Selling more to existing customers is cheaper and you may be able to do this by analyzing what they’re buying and why – information that may even lead you to increase your profit margin and, hopefully, generate more cash.
Cash is the lifeline of your business. Even a small business which allows you to work from home and doesn’t employ a lot of people will require some thorough cash management. By extending payables, borrowing when necessary, asking for advances, and using professional software, you can ensure your business survives and thrives over the long term.
One top way of business finance and money management is tracking your cash flow results every month to determine if your management is creating the type of cash flow your business needs. This also helps you get better and better at creating cash flow projections you can rely on as you make business decisions about expanding your business and taking care of your existing bills.