When you’re running a small business in any sector, the pressure is on to get everything right and for directors in particular to have an extremely broad range of skills and aptitudes. It helps to be creative and show excellent leadership skills to be able to motivate your staff or colleagues but in the end what really matters is the bottom line.
Financial planning and money management will always play a pivotal role in the way a business operates and the way it is able to develop. So for business bosses there is always a lot to be gained from getting better at finance. Here are some tips on how to do just that:
1 – Keep learning
Whatever kind of business you are involved with running or trying to expand, a healthy dose of financial savvy can always be helpful and potentially very significant indeed. To this end, learning about finance and accounting should be viewed as a work in progress, whether you’ve been in business for five decades or five minutes.
2 – Focus on invoicing
As a small business or a provider of any kind of service, there is every chance that your operation will feel the pinch whenever cash flows are squeezed or slow down for any reason. Invoicing and the processes you have in place around this key element of the financial management process are therefore very important. Priority number one in this context should be sending out your invoices at the earliest possible opportunity. By doing so, you significantly improve your chances of being paid early or on time by your clients.
3 – Plan ahead
Deciding on the finer points of a financial plan that looks months or years into the future is not always easy or even possible. But, knowing what you intend to do with income as it appears on your balance sheet can help you keep your company’s progress heading in the right direction. In the context of financial management, the aim at every stage should be to leave as little to chance as possible and having plans in place for good, bad or indifferent outcomes can help a small company survive and thrive.
4 – Pay attention to details
Not every business leader or company director has a natural tendency to pore over financial detail but every element of a budgeting scenario can make a big difference to the whole. By understanding every aspect of what is going on in financial terms at your company, you stand a much better chance of being prepared to deal with challenging situations and of being ready to seize on potential opportunities.
5 – Be clear with clients
For many small businesses, financial headaches emerge in ways that could have been avoided by better communication and clarity around certain key issues. It is therefore good practice to be as clear as you possibly can be about your financial terms are in any given situation, so that there is little or no scope for disagreements that could cost your company money later down the line.
6 – Balance optimism with realism
It is good for any business manager or company director to be optimistic about what the future holds and what might be possible. But, when it comes to financial management, it is important to temper that positivity with prudence and a solid sense of realism. In simple terms, this equates to doing more of what works for your company and less of whatever proves costly, even if it doesn’t match up to the dream scenario you once had in mind.
7 – Be careful when borrowing money
This final tip could apply in virtually any situation of course but in the context of business development it is particularly important. Getting the balance right between borrowing too much or too little can be the difference between success and failure. Generally, the aim should be to borrow only what you need rather than what you are able to access. Although, finding routes to finance at vital moments presents its own challenges for small businesses at present but there are new funding alternatives emerging as ever-more viable options all the time.
Emily Trant is Managing Director of Check Business, a technology start-up that helps SMEs solve the key business challenges of: getting paid, finding new customers, and raising finance. Emily has a successful track record of delivering growth and innovation in digital businesses, and loves getting under the skin of small business challenges. Originally from Canada, Emily has a degree in Economics from the University of British Columbia.