As a small business owner, it can be difficult to manage financial matters and get your feet planted firmly on the ground. Some entrepreneurs thrive on making wise financial decisions, but for others it doesn’t come as naturally. No matter which way you lean, there is always something to learn or improve in your finances. Because like it or not, proper finance management is crucial to the success of any business.
Finance planning can be overwhelming. To be a small business owner you have to do it all! But financial matters can’t take a back seat if your aim is to grow and sustain a thriving business. The good news is that there are just a few tips that can make a huge impact.
In this guess post, Australian Mortgage Broker Sarah Eifermann, shares her top five strategies to set your business up for financial stability, which ultimately leads to success!
As the saying goes, fail to plan and plan to fail.
A business plan and cash flow forecast are not only required by future lenders, but they help you set out your goals and expectations. This allows you to tweak your business as it grows. If the time comes where you require an injection of funds, these plans can also demonstrate that you are serious about your business. You will likely be able to successfully leverage for business or asset finance.
Ensure that you clean up any personal credit report or debts you have, especially if you are finding them hard to manage. With the help of a professional, organize a debt consolidation loan or contact your utility provider to have any defaults removed.
Do whatever you can to ensure your credit report and debt position is as clean as possible, and be sure to make your repayments on time every due date, if not early. This demonstrates consistency and ability to effectively manage your finances. It may feel like a set back, but it’s only short term. Your business will be better off long term.
If you are in a position to have savings behind you, fantastic! If you are not, consider how you are going to fund this. (Hint – refer back to tip 1!)
Can you organize a personal loan or perhaps even an equity investor? That’s someone who invests into your business with cash or equity to help you get started. This person may become a silent partner if you offer them shares in your business in lieu of repaying them, or it may just be a loan that you do in fact repay. In both these scenarios, make sure you have a formal written contract to protect the interests of both parties.
Years in business have taught me that if you don’t have a great marketing plan to bring you business, then you don’t have a business! This is one area most startups fail to cost properly, and then they fail to reinvest in once they get going. A quality marketing plan will not only cement you as a reputable business, it will also help secure larger finance as you grow.
Consider contacting your local marketing firms to gather some price information and likely a bit of marketing direction. Alternatively, start asking around for a good, affordable freelance marketer. They often charge less than a firm and offer a more personal service. Word of mouth is the best place to find one, but there are also some online resources like Upwork. Just be sure to read reviews.
Manage your books, cash flow, and tax obligations. There’s nothing more difficult to finance than a business that is not up to date in its financial management. If you don’t know what you’re doing (or would rather spend your time on managing your business), seek help from a bookkeeper or employ someone. Align yourselves with a good accountant. Make your repayments on time and if you can’t, contact the lender to arrange a payment plan. There is simply no excuse when it comes to this. Finally, declare all your income. Paying tax is not all bad – it means you are making money!
Financial matters can sometimes fall back on the priority list when you are a busy entrepreneur, but even just a few tweaks to your business practice can mean financial success. Whether your business idea is still in the pipeline, or it’s been established for years, it’s never too late to get your finances on track and properly prepare for any future business lending.
If you’re after more specific advice, Sarah is happy to pass on her knowledge – from one small business owner to another – so get in touch with any questions at firstname.lastname@example.org. Or visit her website for more information.