Building a great company with a productive business comes with lots of responsibilities and unconventional management techniques. Finance management is a significant aspect which needs to be monitored on a regular basis to ensure proper cash flow and generation of profits. Financial matters are a tricky business but as a successful business owner, one should be aware of the transactions carried out and how to handle in them in the best possible way to yield optimum outcomes. In this competitive industry with a volatile economy, businesses can survive at the stake of the smart choices by the owners to secure their finances by using reliable methods to manage their funds.
“Small sensible decisions can lead to big long-term benefits”
Big benefits are derived from small decisions; if you start off by making a few wise choices in terms of money matters, you are more likely to save big bucks. Ask yourself the following questions to introduce basic finance management techniques into your business for an organized structure and improved productivity.
How much do you need to live comfortably?
Managing your start-up or a small business includes determining the amount of money you need to fulfill your expenditures to lead a comfortable life before you withdraw money from your business income. It is extremely important for a company’s growth to re-invest the revenues it generates for a couple of years until it is established enough to make a good amount of profit. It is a good idea to calculate the amount you require by controlling your expenses and cutting down on costs and the rest can be put back into the business for its expansion.
Do you really need new staff?
Covering the payroll is the biggest expense in a small business. A growing business means an increased workload on the employees which can tempt you to hire new staff to manage the work but is it necessary? Quantity is better than quality, appoint members who are more efficient and make sure they are working at their full potential. Use of technology has made work easier and certain jobs may not even require an employee for instance bookkeeping and accounts can be managed by a software. Hire interns for non-technical posts as they are willing to do the job for merely a certificate.
Are you really giving a good price?
Time to time review of the market trends can ensure if you are providing a good price for your product or service. Do a proper research before labeling down the price as you do not want to sell less than its market worth. Also take into consideration your manufacturing costs or the price offered by your vendors. Try to negotiate with your contractors for a fixed grace period for you to pay their bills as this will allow you to pay after you sell and to manage your finances efficiently. Keep an appropriate margin of profit by analyzing and comparing your costs with your earnings regularly.
Is it the right time to re-invest?
The substantial development of a business lies in careful decision making in a lot of aspects. One of them is to determine the right time to re-invest your capital. You have to be cautious when making this crucial judgment as it has too many risk factors associated with it but it comes with its benefits too. Meticulous examination of a company’s financial statements to compare expenses with the assets is a clear indicator to re-invest to increase revenue. Plan according to demand; adding more products/services, marketing strategies or adding a new location can all be revenue generating streams.