Streamlining Your Business’s Finances in 2020
Friday, February 7, 2020, 6:00 AM | Leave Comment
Finances are an essential part of any business, and as a business owner, you need to carefully monitor and manage your company’s finances.
In fact, finances can make or break your business, especially if your company is small or new.
Have you taken a good look at your financial statements lately, and do you know how your money is being spent?
By streamlining your business’ finances, you could save money, increase your profits, and improve the chances of your company being a success.
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Get Familiar with Your Finances
If you want to streamline and manage your business’ finances, then you need to become familiar with just where your money is going. If you aren’t the person currently managing the finances, then sit down with your fiscal department and go over your balance sheets so that you can understand how your business is spending money.
To improve your business’ financial performance, start by focusing on establishing a positive cash flow if you don’t have one already. This may mean working to bring on additional clients, increasing your prices, or even cutting down on some of your overhead costs.
You may also try negotiating with vendors to keep some of your inventory pricing down or look into new vendors who may be willing to work with you at lower costs. This is also the time to make sure that your finance books are up to date so that you can actively monitor your finances and the progress that you make.
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Refine Your Hiring Process
Your company’s hiring choices could be costing you money. A bad hire costs money in many ways. There’s the time spent interviewing and onboarding the employee, and then there’s the training and investment in worker’s comp insurance, retirement contributions, and more for that employee.
An employee who leaves your company may also negatively affect the customer experience and could leave behind unfinished projects. When a hire doesn’t stay on at your company for long or otherwise just doesn’t work out, you’ve spent money on that hire and haven’t received much back in return.
Revisit your recruitment and hiring process to ensure that you’re focusing on hiring quality, long-term candidates. Look at each applicant’s past experience and skills to make sure that they have the capability to succeed in your company and to grow in their position should evolve in the future.
It’s also important to find candidates whose values match yours and who will fit in well with your company’s existing culture. A candidate should not only be a good match among your other employees, but will also need to be able to build a rapport with vendors, clients, and anyone else integral to your business’ success.
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Invest in Practices That Provide Future Financial Benefits
Strategically investing in elements of your business can provide financial benefits in the future. For instance, investing in help desk software and other customer service aids can streamline processes for employees while offering more efficient and thorough customer service solutions. These strategic investments can have real payoffs for your business in terms of increased productivity, improved customer satisfaction, and even a better company reputation.
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Prepare for Financial Emergencies
An important element of improving your business’ finances is planning for future potential emergencies. Losing a major client or account can dramatically affect your business’ profits, but if you set up your business so that no one client accounts for the majority of your income, you can soften the blow that this kind of a situation would create.
Natural disasters and key personnel illness or death can also affect your business. Establishing contingency plans can help to keep your business running, minimizing the financial impact.
Lawsuits are also a risk when you own a business. Investing in a lawyer’s services to look over contracts, make sure that your insurance is appropriate for your business, and to advise you on other risk factors like website privacy policy language can help to reduce the chance of your ever having to deal with a lawsuit.
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Remember Your Personal Finance Security, Too
While it’s important to focus on your business’ financial security, don’t forget to focus on your own personal financial security, too. As a business owner, you can save for retirement with an IRA or a Solo 401(k). If you haven’t done so already, open an account and establish a regular contribution plan. You might decide to invest a percentage of your monthly or quarterly income. Whatever you decide, just be sure to set this money aside so that you don’t accidentally spend it.
Much like you ensure that your business has enough money set aside to cover unexpected expenses, create an emergency fund for your own personal use. This fund can make paying for expenses much less stressful and helps you to feel more secure in your daily life.
Sitting down and focusing on finances is never a fun activity, but staying on top of your business’ finances can be integral to its success. When you actively monitor and maintain your finances, you’ll be better prepared for anything that you might encounter with your business.
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