Keeping track of your finances is important when running a business. If not for the purpose of covering outgoing expenses such as salaries, but rather so that you can apply for loans if and when necessary. We hear you asking, “Why would you need to do that?” There are a variety of reasons why you would want to apply for a flexible business loan, but one of the most important is to support the expansion of your rapidly expanding small business. A well-thought-out cash infusion will provide the impetus for your small business’s growth. Here are some suggestions for improving your small business’s financial choices.
Check your credit report
You can also get a head start on the application process by checking your own credit report before you start. Lenders use your personal credit history to determine whether you’re a risk or not, so it’s important to know what they’ll find. You can contact the loan reporting agency and request a correction if your report contains a mistake. You should have a letter describing the situation and how it could have impacted your credit score if your credit report indicates late payments or bankruptcies. This will help to mitigate the negative effects of these black marks on you and your business. Always be truthful about your credit history, and you’ll have an easier time getting out of debt.
Cut back on expenses
If you have a small team or are the sole proprietor of your company, you will incur expenses that will deplete your profits. Keeping expenses low would allow you to make more money at the end of each month. Leasing, payroll, taxes, interest, cost materials for goods and products, debts, services, and other operating expenses should be planned a year in advance to help you reduce the financial burden. They can also help you maintain a solid cash flow position even during the most difficult months.
Open up new ways to earn cash for your business
You’d never turn down an opportunity to make some more money, right?! Since the hit of the pandemic, many businesses have had to operate entirely online – even those that were solely a face-to-face business beforehand. Take the time to scale your DTC ecommerce, make improvements to your website, and ultimately, open up a new avenue for your business to earn more money. Having more avenues that earn your business money will make it much easier to pay back a business loan, and lenders will see that.
Rent instead of buying your office space
If you see yourself needing a business loan at some stage in the future, you should start planning now rather than later. Lenders want to know that you can be trusted with their money and, most importantly, that you can pay them back. Consider how you manage your finances and whether you’d lend money to yourself. If you answered no, you must take action to improve your credit score. Renting rather than owning a business location helps create a credit report for your company so lenders will be able to view payment history in the future to determine if you’re trustworthy.
Make sure you pay on time!
When it comes to accessing documents, lenders will be able to see whether you pay on time or not, so make sure you pay all of your bills on time (especially wages and utilities). Payroll, taxes, interest, cost materials for supplies and products, and loans should all be paid on a monthly basis so you can keep track of your company finances.
Hire an accountant
If dealing with money isn’t your strong suit, consider hiring an accountant to do it for you. As a result, constructing a credible financial report would be less of a concern for you. It also allows you to attend to other urgent matters.
Don’t mix personal money with business profits
Combining personal earnings and business benefits is one of the most common mistakes made by business owners. This can make it difficult to distinguish between personal and business funds, resulting in business profits being invested in places they shouldn’t be. Open a commercial bank account for your company so that you can quickly distinguish between what money goes where. Not only that, but getting a separate bank account for your company makes tax filing easier.
Insure your assets
As an entrepreneur, one of the things you despise having to pay for is insurance, but you will need it in the future. To build a viable portfolio and handle small business finances, you’ll need to spend some time figuring out what’s best for your company and your specific requirements. Insurance provides much-needed financial security for your dependents, such as your children or elderly relatives. Insurance also provides financial protection for your company in the event that you face legal action.
Don’t like the idea of taking out a personal loan? Let’s look at how you can save money for your business.
When you’re running a small business, every penny matters. Expenses like office supplies, furniture, and even training courses can quickly add up, leaving you short on funds. Did you realise, however, that you could save a lot more money on your business expenses than you think? You no longer have to be concerned about overspending, regardless of how important it is to your company.
Consider working remotely
Working remotely has many advantages, including the ability to work through your personal schedule, the ability to avoid leaving your house, and, most importantly, the ability to save money. Allowing employees to work from home saves money on office supplies, transportation, and even energy bills. Many employers are hesitant to allow their employees to work remotely for fear of being taken advantage of, but why employ them if you can’t trust them?
Borrow rather than buying equipment
There will be occasions when you’ll need to use equipment for your company that you don’t already have. For instance, if you’re expanding your office, you might need to hire excavators and earthmovers. Instead of hiring a contractor to do the job for you, consider using an equipment financing broker to save money on labor. Borrowing equipment saves money on more than just labor because it eliminates the need to purchase the equipment!
Go paperless
Many businesses are going paperless to support the environment, and if you haven’t done so already, think about it! You’ll not only be helping to save our world and the millions of trees that are being brought down, but you’ll also be saving a lot of money on paper bills! This can be achieved by:
- Using a paperless document storage system
- Switch to electronic displays for paperless meetings.
- Scan documents into your system that have been sent to you
- Always ask for digital receipts.
- Communicate electronically.
- Create electronic signatures for each member of your team to eliminate the need to print long reels of documents for a single signature.
- Paper that you receive through the mail should be recycled. If you have confidential documents, you can hire a confidential paper shredding company to come and collect your documents.
Utilize free online courses
To stay on top of your game, you and your team will need up-to-date training. Courses, on the other hand, can start to add up, particularly if it’s a company-wide training session. Taking advantage of free online courses will also provide your team with the same content. Allowing your staff to spend a few hours per week on free online courses would increase their knowledge while barely affecting your earnings.
Outsource rather than hiring!
You might sometimes need a member of staff for a more temporary position, so what do you do then? How can you afford to retain another employee after the task is completed? Outsource your work! You can list your job on websites like Upwork and Fiverr and wait for freelancers to contact you. You pay up and go your separate ways at the end of it all! It’s that easy!
Use social media
For businesses, social media is a very powerful tool, and since it is free, you can use it as much as you want! Learn the algorithms of and social media sites before reaching out to your existing and potential customers. Social media marketing is also a fantastic way to connect with like-minded companies and collaborate, potentially saving or even making you money! Here are some social media tips to keep in mind:
- Stick to the 70/30 rule with sharing content
- Answer queries and questions (even if they’re bad ones)
- Regularly post to avoid becoming lost in people’s feeds
- Make good use of hashtags
- Run competitions and giveaways to encourage shares and more follows.
Cancel overtime
Finally, if overtime is one of the most expensive expenses, eliminate it! Although this may seem harsh and may slow down your business’s processes slightly, you’ll be shocked how much money you can save each year by not allowing employees to work overtime. Instead of paying for overtime, why not encourage employees to leave early or accrue hours to take a day off every now and then? Your team will be more accommodating than you imagine!
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