When it comes to small businesses, owners face just as many challenges as seasoned corporations do – the scale is just smaller. Having the proper knowledge, tools, and support is paramount to navigating the financial state of affairs you’re currently facing – and those you’ll inevitably face in the future.
How to deal with your most common financial headaches
Below, you’ll find tips on how to deal with a few very common challenges small business owners face, including proactive steps you can take to avoid them:
1. Pay attention to your cash flow management
It can get really dicey trying to manage your business’s cash flow, especially those times when you find yourself running really lean. The best bit of advice for avoiding cash flow pitfalls is to keep up-to-date, accurate records on everything related to what’s coming in and what’s going out.
Truth is, many fall victim to the consequences of poor organization and data-keeping and the longer they wait to change, the worse things get. One mistake compounds to another and pretty soon you won’t even know your head from your butt because you’re so confounded.
Poor record keeping is also a red flag to investors and loan officers to steer clear of you. Something as simple as a payroll loan to cover your labor expenses for the month can become impossible to get if you can’t show convincing paperwork to prove you need the money.
2. Deal with your accounting woes – ASAP
Accounting goes beyond simple cash flow issues and delves into daily sales, outstanding invoices, amortization, and any financial obligations you have now or will have in the future. Proper accounting is also a big part of any smart company’s growth strategy, as it takes money to grow a business.
There are more free and paid accounting apps available than there are businesses who can use them. There’s simply no reason not to have your accounting in order with such a simple solution at your fingertips. Most software out there is so refined that the user needs to have no formal training in accounting principles in order to use them.
A good accounting app software will act as a “virtual accountant.” Accounting for sales and expenses and immediately transferring totals into the company income or balance sheets.
If you have the budget, you should consider hiring an accountant – a quality one, that is. Apps can offer you so much, but expert accountant can offer you more than just preparing financial reports for you; she can advise you on your issues based on her vast experience.
3. Use company credit cards (rewards) to your advantage
Company credit cards may not be for everyone. They come with their pros and cons. Most important, and this is sad to say; some business owners just aren’t responsible enough to have one.
However, if you have the restraint to use them only for business essentials, company credit cards, especially those that offer cashback rewards, can be just what the doctor ordered for a struggling small business. Rewards points basically pay you for using your credit card.
If you can manage to pay your balance every month during your interest free period, you’re basically making an investment that pays you back a nice lump sum of money at the end of the year.
The biggest benefit is in a credit card’s ability to help you build your credit rating. A better credit rating means lower interest loans, more respect from future investors, and the ability to do business with vendors who can offer you better deals and help you expand your inventory to increase sales – even when you don’t have the liquid cash to pay for that inventory immediately.
Step up to the Plate
Even the smallest SMBs today have access to financial tools and resources that will help them compete with businesses three times their size. These tech advances are helping to bridge the accounting and finance gap small businesses have suffered from in the past.
Since most small and medium businesses can’t yet afford an accounting team – or even a single accountant – the tips provided above should help keep you on the right track as you continue to build your business year after year.
Good luck in all you do! Please don’t hesitate to share your own insights and tips into managing an SMB’s financial health.