When you got into business, the draw probably wasn’t the accounting side of the operation. However, it’s tough to be successful, perhaps even impossible, without your business’s finances in order. No matter your industry, there are several strategies to manage your business’s finances, increase efficiency, and even save time.
1. Leverage Technology to Maximize Results
The cost of technology is more accessible than ever, and if you’re not using it to your advantage, start now. Cloud-based technology requires little more than a login to implement and can transform your operations with its capabilities. Do-it-all small business software takes clunky Excel files of customer records and builds customer databases. You can market, invoice, and collect from happy customers, all within one software system.
With a comprehensive solution, your team isn’t logging into multiple systems and transferring data either. When things work together, you can automate campaigns and establish triggers to identify high-potential clients. This way, you can focus marketing efforts in the right place and send sales teams to clients ready to buy. Use your software’s messaging system to collaborate with the team too, seamlessly sending a link with the client’s details.
The financial impact of technology is layered, streamlining your operating costs by using an all-in-one system. Your efficiency improves when you use the tool, cutting down on rework and saving time. Your team can focus on value-added work while the software sends invoices and follow-ups, improving payment cycles automatically. With automated processes, you can save time and open up capacity, reducing your need to hire more staff.
2. Establish Financial Controls
Gone are the days of the expense account where lunch paid by the employer was the norm. However trimmed down fringe benefits may already be in your business, you could likely improve your controls. Review your current process of making new purchases for the business to see if there are any gaps. From office supplies to maintenance work, you should have a methodical process of price checking and approvals. Without it, you could be overspending and putting your cash flow at risk.
Establish a monthly financial analysis process that is set on a schedule. After the month closes, set a due date for the analysis to be complete and presented to the leadership team. Include everyone in this process to facilitate accountability and awareness, which can in turn improve compliance. Set the expectation that everyone will speak to their area of responsibility, using a template to guide the conversation.
Bring in your outside accountant or financial expert to share their analysis semi-annually. This candid feedback and insight can cut through any closely held beliefs the team may have. This external observation can bring financial opportunities and risks to the forefront that those close to it may miss. Conduct a financial audit annually to keep your team accountable to the plan you have in place. By establishing controls and accountability, you can protect your bottom line and your business’s future.
3. Manage Debt and Capital Expenditures
There are many advantages for businesses that spend money investing in the future. However, without a clear process for expenditures, it’s easy to get in over your head. Strive to manage debt load and expenditures by following your financial controls and leveraging your options. Tap into tax incentives, grants, and economic development opportunities to make wise investments.
If your construction business needs new trucks, it makes sense to depreciate them. However, certain brands may be eligible for incentives from the dealer or federal government. Assess how you handle employee usage of equipment, which can add wear and tear but may be viewed as compensation. Weigh the benefits of how you classify this expenditure based on industry standards alongside practicality.
Build collaborative relationships with your local chamber of commerce to expand favorable lending opportunities. Through the chamber, you can access low-rate loans or grants based on your ownership profile, industry, or location. In these cases, you’ll make investments in your business that align with your goals and the chamber’s business growth priorities. Meet with their business counselors who can advise you on upcoming lending opportunities. When you do, you can grow strategically.
4. Get Professional Advice
When you’re too close to a topic, it’s hard to see it clearly and the same goes for your business. In most cases, your business is a big part of your identity, and it is often a reflection of you. It’s in your best interest for your business to succeed, but your emotional connection can cloud your judgment. That’s why it’s important to partner with a third-party expert who can offer candid advice and guidance for your business.
A qualified accountant, financial consultant, or auditor can be the non-partisan sounding board you need to make wise decisions. They’ll approach your quarterly reports objectively, their distance from daily operations serving as an advantage. Consultants with accreditations or association memberships will also be beholden to a high ethical standard, making their advice especially valuable. Collaborate with a professional on financial matters and include them in conversations before expanding or making new investments. Their input can help ensure you’re making smart financial moves that keep your business in the black.
Financial Management is Job Number One
You may have the best employees, product, or service scores, but if you can’t manage your finances, nothing else matters. Secure firm financial footing by establishing controls, getting outside input, and making smart investments. When you do, your business can focus on owning its industry and making a difference for your customers and employees.
