Top Ways to Boost Business Finances and Support Growth

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Poor cash flow is the number one reason for small business failure in the US. Neglecting to control the financial aspect of running a business can spell disaster and land you in hot water sooner rather than later. If you want to avoid being another failed business statistic, it’s worth investing some time and energy into improving your finances to allow you to operate successfully and give your small business the best start.

Let’s take a look at some strategies that can help you improve your cash flow and keep your business financially healthy, or ‘in the black’, rather than in debt, or ‘out of the red’.

Forecasts and Budgets

Before you start cutting expenses and streamlining your money, you need to sit down and prepare thorough forecasts using historical data to allow you to track trends and ebbs and flows within your profits and takings. This will help you understand where and when you’re making the most money and when the most profitable periods are. This will highlight any lean periods you need to accommodate when making your budget.  

Creating a budget means tracking all of your income and expenditures to the cent. You need to know exactly what you have coming in and when to distribute funds to where they need to be without leaving yourself short. This is where accounting software can be massively beneficial. It empowers you to monitor your cash flow for automated invoicing, track expenses, and much more, giving you a sense of control over your finances.

Reduce Debt

As a small business, you should be careful about the amount of debt you take on. There needs to be a clear rationale for adding to your debt level, and understanding when borrowing is strategic and beneficial and when it is fiscally irresponsible is vital. This knowledge will make you feel informed and strategic in your financial decisions. 

Identify ways to pay off your debts as quickly as possible to reduce some of your expenses and eliminate them quickly.

Separate Finances

It can be all too easy, especially for sole proprietors, to combine finances when things are a bit tight. However, this is the last thing you should be doing. Instead, be stringent with how you approach your business finances. Keep all of your personal and business spending separate, and don’t mix your money. Pay yourself a wage from your takings and be disciplined in your approach so you don’t get things mixed up to the point where they’re both completely intertwined.

This includes paying for business expenses or equipment from personal accounts, taking out loans for the business with your personal credit score, and opening lines of credit for both aspects.

Reinvest

To keep your business stable and profitable, you need to reinvest back into the company. Reinvesting can be exploring growth opportunities, implementing new tech and software to help you improve your operations, or investing in employee training. If you want to remain fiscally viable, you need to spot growth opportunities and branch out at the right time using data to back up your actions, doing so only when you have the appropriate funds to finance each initiative and commit to pushing the company in the right direction.

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