Five Financial Hacks For Small Business
For many small business owners, running the company is the easy part. It is managing the finances that can cause the most stress. But how a business manages its money and cash flow is as critical to success as the product it produces or the service it provides. Here are five financial hacks that can help business owners manage their money as well as they manage their business.
- Engage, Don’t Employ
Engaging a consultant can often be a better value than hiring an employee. Businesses can often get access to a wider, more experienced talent pool by hiring the right consultants. And consultants come without commitment. Those entanglements like benefits, vacation time and payroll taxes all get left at the door when you engage a consultant. If a business finds the right consultant with the right skills and under the right agreement, it can be more productive and a better financial value than hiring an employee.
- Invoice Early and Often
To many business owners, invoices are tedious and time consuming – distraction from everyday business activity. Invoices, however, are the lifeblood of a company. The more frequently a business is able to invoice its customers, the smoother its cash flow will be. Rather than waiting to tackle a pile of invoices at the end of the month, process them continually throughout the month. This will make the process less painful and help to ensure that a regular flow of customer payments is coming in the door.
- Get Beyond the Bank
Many businesses rely heavily on their banking relationship for all of their financing needs. While a strong banking relationship is key to any business enterprise, there are a variety of options for financing a business other than a traditional bank. Non-bank commercial lenders offer a number of flexible lending products that businesses can use to create the liquidity they need for unexpected events like a large order. It is often easier to qualify for these products than it is for a traditional bank loan and they can be secured by an invoice or contract.
- Grab the Bills by the Horns
Proactively addressing business challenges and liquidity strains can help a company stay ahead. Knowing the financing options available to the company will allow it to move quickly when cash flow challenges occur. Do research in advance and be ready to access financing when it is needed. Being proactive could make the difference between having the liquidity to accept that big order and having to turn it down because of a lack of available capital.
- Invest, Don’t Spend
Making wise decisions with the available capital can be a major driver of a successful business. Carefully consider the return on investment (ROI) of each expenditure, especially major ones. Assessing expenditures as investments will ensure a company is making wise choices with its capital and help to make it profitable.
While managing the finances of a small business is never easy, these five financial hacks can help keep a company on track.