Starting a business isn’t for the faint-hearted. There is so much work, time and dedication that is required if you want to grow and sustain it over time. However, it is essential to remember that building a business is a process that takes time.
Finances are a significant part of growing a business, so you must have them in order and keep them healthy as you grow and expand. If not, you could find you begin struggling with your finances, and you end up in unnecessary debt. Continue reading to find out how you can maintain healthy finances as a growing business.
Know Your Business Goals
Knowing what your goals are as a business is a good starting point for maintaining healthy finances. Decide what it is you want to achieve for your business and how to gather the funds that will help you get there. An example of a financial goal for a small business is profitability and revenue.
This is likely a popular one as most companies go into business for profit. Another example of a finance-related goal is buying a property after a designated time. Think carefully about each goal and ensure they’re realistic, measurable and timely.
Track all Expenses
This is a point that cannot be emphasized enough. Tracking expenses is crucial if indeed, you want to stay out of debt. The good thing is that as overwhelming as it may sound to track all of the money spent, there is an endless number of tools available to help you.
Below, you’re going to find a couple of apps that you may find helpful.
- Expensify: For those that happen to be on a budget, Expensify could be the perfect app for tracking expenses, mileage and also billable time. Another great feature of the app is that it can be used to scan receipts and create expense reports which can be converted to PDF files. All of these features will help you stay organized and save you time.
- Mileage Log +: Getting mileage logs from employees so that they can be reimbursed on time can be a struggle. However, by using Mileage Log +, you can track gas mileage, store frequent trips, and easily share expense reports too.
- Rydoo: If you need an app that provides multiple ways to record your expenses, Rydoo is a good fit. Employees can register their costs through the app, online or by email. Purchases can also be viewed categorically whether by office location or project. Even better, spending policies can be added so that if employees record expenses that don’t align with the policies, employers can be notified immediately.
Maintain Good Credit
Good credit is a powerful tool to have as a business. You never know when you may need a loan for business purposes, so you want to have a robust financial standing. There are several ways to ensure you maintain good credit and don’t fall into spiralling debt. Here are a few that you could try implementing.
- Pay your Bills Ahead of Time: Although this won’t always be possible, paying your bills ahead of time is the safest way to maintain good business credit. To ensure there are no mistakes, automate your payments using a free invoice template so you can receive payments on time. Also, be sure you have enough in your accounts to cover the costs. As you probably already know, late payments have a negative impact on your credit and can be off-putting for lenders.
- Check Your Report Regularly: It’s always good to check your report periodically just to make sure that you’re on track. Check for any late payments or past judgments that could be affecting your score and see if they can be removed. Crediful has useful advice regarding how you can remove a judgment from your report if you find you have one on there. This is something you should take seriously as it could make a significant difference on your credit score.
- Use Credit Cards as a Boost: To boost your credit score and show you have a track record or responsible borrowing, credit cards are ideal. Use them for everyday expenses such as utilities and travel. However, make sure you keep your utilization at 30% or below. Only spend what you’ll be able to pay off quickly.
Hire an Accountant
To be on the safe side, it’s always good to have an accountant. These professionals have the knowledge and experience needed to help you meet your financial goals as a business.
Some signs that you may need to hire an accountant include recurring mistakes in your business finances and also exponential growth. With that being said, when hiring an accountant, make sure they can answer basic small business accounting questions. You also want to make sure they have an entrepreneurial spirit and understand your business vision.
Negotiate with Service Providers
It was mentioned earlier how important it is to keep your expenses low. One way to do this would be by negotiating with your suppliers and service providers.
This could be anything from electricity providers to vendors who give you supplies. Whether you’re a new customer or a repeat one, you can always negotiate a better deal.
For existing service providers, every couple of years, renegotiate your rate but first see what market rates are. You can use this as a bargaining tool to get more affordable prices.
For new suppliers or service providers, entice them by promising repeat business in exchange for a good rate.
In order to maintain sound finances, there should also be a strategy in place to grow them. The more money you earn, the easier it becomes to keep up with your bills, as long as you keep your expenses as low as possible.
Think about how you can scale up as a business as a means of expanding your reach and hopefully, bringing in more revenue. Here are a couple of tips for scaling up below.
Before you scale up, preparation is vital. If you try to scale up without being ready, it could be disastrous.
In order to prepare to scale up, ensure you have the fundamentals. These include knowing your largest core users, identifying the marketing channels with the best ROI, and ensuring your product line is a good fit for your market in place.
Also, having the right team and automating everything possible will help the process too.
Ensure you can afford it
Scaling up can be relatively expensive, so calculate the costs before going through with it. When you do make money during fundraising, all of the funds should be focused on growing the business.
Let Employees Work Remotely
Remote working is far more pervasive now than it once was. If you haven’t got on board with it, be open to the prospect of letting employees work from home. This reduces your overhead costs. As a result, you may also find they’re more productive because as they don’t have to waste hours commuting.
Alternatively, if you need their physical presence sometimes, choose a few days a week where they can work remotely.
Make Wise Investments
As a business, you must make the right investments. This could dramatically improve your finances and keep your business afloat.
There are core areas that you should invest your money, such as business improvement, marketing, and your team. Always evaluate your business and identify areas that are lacking and spend money in such places.