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Tips and Tricks for Small Businesses

August 26, 2019

If you are a small business owner, you probably would have started with a great business idea that you thought had heaps of potential to do well in the market. You decided to run with it and launched your own business. It took you some time to arrange the funds needed, and once it was done, you probably thought it was going to be smooth sailing from thereon. What you didn’t anticipate was how challenging it could be to manage the finances of a small business once it was off the ground and running.

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According to research, only half of small businesses survive past their initial five years, the reason being the early-year-challenges. Mismanagement of business finances, whether it is due to failure to plan and set budgets, lack of proper accounting systems and procedures or unrealistic expectations related to revenues and costs, are too common in small businesses and leading causes of downfall.

However, if you are ready to study the financial mistakes made by many new entrepreneurs and learn the tricks of financial management for a small business, you can ensure your business takes good care of its money and survives in an already challenging and unpredictable economy. Here are some of the top tips to help you have a safe sailing.

Start with Sufficient Capital – When estimating the funds needed to launch a business, many entrepreneurs only take into consideration the initial cost of setting up, i.e. the cost of acquiring office space, machinery, and furniture. But what you also need is business expenses for the first six months, as you need to give the business some time to stand on its feet. Not a lot of entrepreneurs are lucky enough to start making profits during early days of their business, therefore you should always have a practical plan in place.

Cut Costs Where Possible – For a small business, even small amounts of overspending can have a significant adverse impact on its finances. Therefore, do not be shy to start small and keep spending to a minimum especially in the early years. Remember, the money you save now will help ensure your survival when the odds are not in your favor.

Cost-cutting is possible in several areas:

  • Save office rent by starting your business from home or small office space. You can always move to bigger premises once your business can afford it.
  • Limit your marketing budget by focusing solely on your target market. Avoid any fancy business cards or expensive marketing, which will cost more than the benefits it can bring for the business. Take advantage of social media marketing – it costs little (or even nothing depending on how you choose to market yourself) and has excellent customer outreach.
  • Start with a small workforce – hire the people you need but outsource services to a third party as and when required, such as legal and tax advisory, IT support, etc.
  • Lease equipment instead of purchasing it – you can get the machinery you need without having to pay the high initial cost.

Analyze Your ROI – When you look everywhere for small business tips, the most common advice you will find would be to keep the costs down. It is imperative to consider the Return on Investment when deciding which expenditure is worth incurring and which isn’t. A small business with limited funds has to ensure that the money available to it is getting used in areas where you can generate maximum return. If some projects are not paying off, it may be best to shut them down and redirect resources to initiatives that can create better returns for the business.

Look for Growth Opportunities – As a small business owner, the thought of growing the business can sometimes feel like an intimidating idea. The areas like funds sources, smooth business processes, dealing with the increased cost of operations are likely to put you in a fix at some point in time.

Growth is vital for the long-term success of the business. Customers appreciate variety in products and winning customer services and after-sales services. Employees benefit from career advancement opportunities, and the company itself benefits from increased profits and better brand image. Growth helps move the business forward in the right direction if adequately managed.

Seek Finance before You Get into Trouble – Small businesses often wake up from the slumber only after they find themselves in a spot of bother. Unfortunately, this is when you are most likely to have your loan application rejected. When a lender is presented with poor financial statements of a small business with no prior track record, all they see is a high possibility of losing their money if they choose to lend to your business. Some form of external finance should always be available to the business, such as a line of credit for emergencies or a loan option in case a growth opportunity comes by.

Conclusion

To sum up, if you want your small business to survive, the finance function should be considered an integral part of the company’s strategy. Only when you learn to understand your numbers will you be able to ensure your business survives and grows at the right speed.

 

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I’m Tim from The Tech Block. Tim Techy! haha. I’m all about gadgets, gaming and technology. I don’t just sit in my house all day playing around on gadgets, but they are very integrated into my everyday lifestyle. When I work out I use technology to track it, when I turn the heat on in my home, I use my computer to do it and when I travel, I take my fun techie stuff with me!

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    I’m Tim from The Tech Block. Tim Techy! haha. I’m all about gadgets, gaming and technology. I don’t just sit in my house all day playing around on gadgets, but they are very integrated into my everyday lifestyle. When I work out I use technology to track it, when I turn the heat on in my home, I use my computer to do it and when I travel, I take my fun techie stuff with me! Read More…

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