“Every decision you make in business has a financial consequence” – Barbara Vrancik.
Every business survives on financial stability. The initial years are crucial to determine the long term success for any business. The challenges faced by a business strengthen its capability to overcome any problems faced.
Financial loses, and instability accounts for the majority of the reasons for any business failure. To survive forever, it is essential to manage your cash flow and plan your finances in the right direction.
When one knows about his/ her weaknesses, it is easier for them to work on it. Similarly, by being aware of the pitfalls in your business, you can manage your finances efficiently and be vigilant about it.
Following a pragmatic approach will always help you to have the real picture of your finances. Hence, taking practical steps will help you eliminate excessive financial risks and allow your business to grow.
Some financial tips are mentioned to guide you through your financial journey.
1. Business and financial plan
A business plan will help you determine your long term goal for your business. It will define all your business activities, including your finances.
Along with a business plan, it is mandatory to devise a financial plan as well. While managing your finances, you should always work in a structured manner.
The inflow and outflow of your finances should be tracked and managed tactfully. There is no single recipe for a business to be successful. Different strategies work for other companies.
Also, ups and downs are part and parcel of any business, so the financial plan needs to be changed as per the situation. You can devise short terms financial plans like quarterly plans or half-yearly plans and update them as and when required.
While drafting your plan, be realistic and estimate your total spending and income to have the right picture. Once you plan it, you can implement it and see if it will yield results. If not, you can change the plan.
2. Ensure timely payment
For your business to run smoothly, ensure your customers to pay on time and entertain no late payments. From the very beginning, it is advisable to make your payment and credit terms very clear to avoid any confusion in the future.
Having a straightforward approach will reduce the risk of late or non-payment. Another the way is to go digital and use computerized credit management system.
This digital system will help you keep a record of your finances along with a track of your customers and their payment status.
3. Daily expenses
Even the biggest of companies maintain a daily cash flow routine to avoid any discrepancy in your finances. You should keep a record of your daily expenses that may include rent and wages.
This will also help you to calculate and make you aware of the minimum cost incurred by your business daily.
4. Tax deadlines
Future planning is always right, be it in any aspect of the business. You should meet your tax deadlines well in time to avoid any late fines and interest.
Meeting the deadlines saves money, effort and time being invested by you in your business. Failing to do so can lead to hassles and inconvenience for your business.
Poor stock control is one of the reasons that contribute to business failure. Stock controlling is a crucial step.
Keeping a check on your stock availability and restocking when needed saves you from any wastage.
Like mentioned earlier, you can use digital systems to track your stock levels, allowing you to free up your cash simultaneously having the right amount of stock.
Effective financial management
For any business to grow and survive, effective financial management is an essential part.
Many businesses, at times, fall short of money for their functioning. To cater to the financial needs of these businesses, many financial institutions and private lenders offer loan facilities.
Businesses having a history of adverse credit score and very bad credit loans with no broker are offered to them as well by these lenders on pre-decided terms and conditions. These lenders, in some cases, require no guarantor. Businesses can fulfil their financial needs by borrowing these loans.
Effective financial management helps your business grow substantially and makes optimum use of the resources. It also prepares you for the long term financial stability by gaining an edge over your competitors.