Their “small” designation by no means describes these businesses’ role in the global financial ecosystem. In fact, small businesses take up the vast majority of all business entities, and they are still on the rise as the preferred model of operations for entrepreneurs everywhere. As appealing as it may be to start and run a small business in this favorable climate, some issues remain pivotal in ensuring optimal growth and development.
From finding employees that will share your values and stay loyal to your brand, all the way to building client relationships, you need to focus on so many facets of running a company in order to succeed. But there’s one essential puzzle piece that will allow you to fuel all other parts of your operation: your finances. When your cash flow is in order, your employees well-paid, and your vendors happy, your business can flourish.
Here are a few tips and tricks to help you master the art of money management for any small business, and you’ll hopefully gain the advantage you need to slowly allocate more funds towards development and growth.
Spot budget drains and eliminates them
Modern-day businesses work in so many different environments, empowering many to let go of the preexisting convictions that office-based, nine-to-five work is all there can ever be. Letting your employees work remotely from their homes on their own devices means you immediately cut several key costs: office rent, utility bills, office equipment and supplies, and technology used by your staff. Add to that, transportation fees will also be eliminated, since they’ll be able to work from the comfort of their own home.
Even if you do choose to work in an office, cutting costs is still perfectly feasible by going paperless and building a digital presence for your data and documentation. You can eliminate printing material and equipment costs as well as the use of storage space for paper documents by switching to a digital office and placing everything on the cloud, where it’s easily accessible for all employees at all times.
Automate the payroll process
Reducing the costs of accounting and payroll processes paired with satisfied employees is more than possible with the help of the right automation tools and strategies. Instead of tiresome manual work consisting of paperwork and form-filling, your accounting software can actually make sure you’re on time with all of your expenses, sending invoice payment reminders, and cover employee salaries, too.
To further simplify the process, many small business owners choose to hand out personalized payroll cards to their employees, which enables them to have immediate access to their funds and avoid check-cashing fees. Add to that, these cards neatly integrate with your entire accounting software system and help you avoid time-wasting paperwork with automated forms and built-in compliance with necessary regulations.
Incentivize timely client payments
There isn’t a single company out there that has never had a single issue with late payments. When you’re a service provider, chances are that your clients keep coming up with various excuses as to why they still haven’t paid their invoice, even though you’ve not just sent it on time, but you’ve also provided the service. Late payments can affect your cash flow negatively, so do your best to inspire your clients to pay in time.
For example, incentivizing clients with a discount for early payments is a great way to inspire them and preserve your long-term relationship, while you also protect your cash flow. Add to that, you can penalize late payments by incurring additional costs to the service rendered, which is another way to nudge timely invoice payments.
Stick to your budget plan
Perhaps that latest laptop model seems like a dream come true, but unless you and your employees are having trouble with your existing equipment, you need to take a deep breath and postpone the shopping buzz. The same applies to all those big or small purchases so many business owners approve of before ever taking a look at the actual budget allocation for that particular segment of the company. Maybe it’s time to get a new water cooler, but it might also be a great time to trim some of your expenses, too.
In the spirit of frugality, you should be mindful of your business needs and factor them into your annual budget plan. Of course, some leeway is always necessary for those unforeseen and emergency expenses, but you should always keep track of them so as to be mindful of your financial needs for the upcoming year, too. Sticking to a budget takes some adjustments and willpower, but you can certainly do it for the sake of your business.
As you move forward, use these bits of wisdom to ensure financial stability for your small business and thus improve your advantage in the industry. There will always be issues to deal with and mistakes to learn from, but preventing poor financial decisions is one of the most effective ways to ensure long-term success for small businesses out there.
Lauren is a regular Bizzmark Blog author that has many articles published with the main focus on clients who want their brands to grow in the fast-changing and demanding market. Her personal favorites are successes of small businesses, startups, and entrepreneurs. She goes through life with one strong moto – Kindness, always.