Managing finances is one of the most difficult aspects of running a business, particularly for startups and small businesses companies. Research shows that 50% of startups close their businesses within the first five years, while 70% of them fail within 10 years. Sure, your goal is to build audience engagement and prioritize customer satisfaction so that you can form a long-term relationship with your customer base. However, that alone will not fund your business. You need money to keep your business up and running.
Unexpected overheads are very common and so are overestimated profits. However, these small factors can cause financial stress if they are not managed properly. If you too are struggling with financial management, here are the top 6 ways to strengthen your business’ financial performance with minimal effort. Let’s take a look!
1. Debt consolidation
Many financial institutions offer consolidated debt plans where you can combine your debts into a single low-interest and flexible loan repayment plan. Debt consolidation means combining multiple debts into one larger debt that comes with a comparatively lower interest rate and low monthly payments.
These repayment plans are more flexible than regular debt repayment options. In addition to debt consolidation, you should make it a habit to pay your bills on time. If you miss payments, interest, penalties, and other fees will quickly add up.
2. Reduce your overheads
You won’t keep your business up and running for long if you can’t control your overheads. The vast majority of businesses fail because they can’t finance the working capital they need to keep the business running. Whether it is staffing or buying equipment and fixed capital for your business, research will help you find cheaper and better alternatives.
Reduce your overheads by unsubscribing to the products and services that you don’t currently use and save your profits for your business’ growth and development plans. Overheads may include taxes, utility and credit card bill payments, travel expenses, marketing costs, labor costs, legal advice, transportation and packaging, and other costs for running a business.
3. Offer multiple payment options
Gone are the days when businesses accepted only cash and credit card payments. If you want to succeed in today’s competitive market, a single payment option will not be enough. You should focus on adding multiple payment methods to offer your customers flexible payment options. Business books recommend reducing any friction between your customer and the final purchase transaction. If ease of payment is a source of friction, then investing in a payment option could result in higher turnover. E-wallets are a must for fast and secure transactions, both for your bricks-and-mortar customers and online buyers. EPOS machines for payments also make a good option for contactless payments in this day and age.
Many online customers abandon their shopping cart because of limited payment options. Your customers look for convenience, especially when it comes to payments. The more payment systems you add to your website or brick-and-mortar store, the more customers your business will attract, and the higher your revenues will be, and lower revenue leakage will be.
4. Seek help from investors
Running a business is not a cakewalk. While you may qualify for corporate loans, debt isn’t the best way to fund your business’ working capital. A simple Google search will give you a list of reliable investors that are willing to help startups and small companies for a fair ROI.
However, these investors support businesses that are in good shape and have the potential to grow. Generally, investors take this decision seriously and weigh up the pros and cons before parting with their cash. So, make sure you have a solid ad impressive business plan to show.
Beyond private angel investors, you could seek investment from another competitor or conglomerate. Merger & acquisition books suggest that M&A is often misconstrued as simply an exit strategy for private equity and venture capital investors. However, merging or accepting investments from another company can also be a legitimate growth strategy.
5. Improve your cashflow
The better your cash flow, the easier it is to manage expenses and other aspects of running your business. Fortunately, there are plenty of ways to improve your cash flow. For starters, you should recover all unpaid invoices and outstanding balances from your customers.
Automated invoices are a great option for business owners that struggle with recovering payments from their customers. This system allows you to decide when you’d like your invoices to be sent to your customers and how long your customers have to make payments after receiving the invoices.
Every time you make a sales agreement, be clear on the payment terms and when you expect payments to be made. If you can’t recover your outstanding payments, consider working with a debt collection agency, though this should be your last resort.
6. Focus on Marketing
Digital marketing has transformed the world of marketing for businesses. From social media marketing to email campaigns, you can tap into loads of marketing channels to get your brand in front of your target audience. Search engine optimization is an economical and effective way to attract a wider audience to your business. Social media is another great option for those who want to build customer engagement. These marketing tactics require minimal investment and deliver the best results.
Financial issues are not uncommon in today’s competitive economic environment. However, with the right approach, you can put your business in a solid financial position!