Running a business requires constant vigilance. It often happens that, even though it seems like you are doing well, and profit keeps coming your way, the money seems to disappear into thin air. Don’t worry, it’s not just your imagination.
It’s very likely that your finances are not as airtight as you thought they were. Your business might be leaking money in unexpected ways, and it’s costing you dearly.
Instead of getting frustrated, get productive.
The first step in every process is the analysis. To be able to determine where all your money is going, it’s important to go through your books and put everything on paper. You can’t start cutting your expenses until you’ve determined where the leaks are. There’s no better place to start than a detailed financial analysis.
Hire a Pro
If you’re not an accountant yourself, chances are you need one. You might have some basic finance knowledge, but you’d be surprised how helpful a professional can be.
Find a seasoned, experienced accountant to look over your books. They will be able to identify problem spots straight away and offer you the appropriate solutions. They will also probably have a whole host of tips and tricks to offer you for the future. If you are looking for free advice, try asking the Money Nerds.
You might think that a true businessman is always looking for an investment opportunity, but that is not entirely true. While a good investment opportunity might be extremely tempting, you must be careful not to spread yourself and your company’s money too thin.
It’s wise to allow your business to grow first, and establish a strong position before rushing headlong into investments. Focus on you and your business for a while before you start looking (and spending!) elsewhere. Don’t let yourself be scared into diversifying too soon. Your best bet is to invest in yourself, your company, and later, other companies in the same field, something that might be of use to you, or something you know well. Investing in things you know nothing about is a risky move.
Again, this is a field where you might benefit from professional advice. Getting the opinion from a financial specialist about your potential investment is always a smart move. To protect yourself from legal issues, you could also consider litigation support services.
Take a Look at Your Goods and Employees
It might sound counterintuitive – but your stock might actually be losing you money, instead of earning it. If you are producing (or buying) much more than you can sell – you are bleeding money.
Unsold stock costs a lot of money in terms of storage. It’s very important to find that exact sweet spot – having just enough product to satisfy the demand of your clients, without paying unnecessarily for excessive storage.
What about your workers? Be careful: you don’t want to fire people, only to find that you have lost clients due to bad service. Leaving your business understaffed or hiring cheaper employees who are not as qualified or committed may cost you more in the long run.
Reconsider Your Vendors
Are you sure you have looked hard enough for best vendors? Is somebody else offering better prices, higher quality, discounts for buying in bulk, free shipping or other benefits? Check out different bids for goods, transportation, insurance and whatever else your company is buying from somebody else. There’s a good chance you could pinch a few pennies here.
A detailed look at your company’s finances is sure to uncover a few holes that need to be plugged, and from there it’s smooth sailing!
Topics you may also be interested in:
Latest posts by Dan Radak (see all)
- 4 Most Common Small Business Loan Mistakes - March 13, 2017
- 4 Key Prerequisites to Make a Small Business Grow - March 3, 2017
- How SMEs Can Benefit from Remote Work and Startup Revolution - February 23, 2017
- Three-Tier Guide for Perfect Communication in Startup Branding - February 6, 2017
- Keep Your Startup Finances Under Control Through Financial Discipline - January 17, 2017