When running a small business, cash flow is everything. Research suggests that 50% of new businesses will fail within their first five years of operation, and 70% will flop within 10 years. Many factors exist with these failures, but one area that most businesses desperately need to consider are the best practices for financial growth. No matter the size of your company, these tips speak to keeping your business in the money.
Hire the Right People
Your staff will be the bones of the company, holding everything up and providing the structure. It stands to reason that the people you hire will be of utmost importance. Take time and care in hiring each employee and you’ll end up with the right staff to get your business in gear.
Good Businesses Practice Consistency
This could be the very key itself to good business practice. If you do nothing else, be consistent. Consistency is what franchises are built around. When you walk into a McDonald’s anywhere in the world, you know exactly what you are going to get when you order a Quarter Pounder, right down to the exact ingredients, quantities, and order of toppings.
Make a plan
Each business will require a different business strategy, but making a plan for your business’s success cannot be skipped. For example, you may want to consider formulating a long-term capitalization strategy to consolidate earnings with short and long-term debt. Also remember that you can always hire outside help, such as an accounting consultant.
Set up a collections department
A Collections Management System or a Commercial Collections Department handles the money for a company, and usually encompasses many small business needs related to collecting money. A commercial collections department takes charge of managing accounts receivable, billing clients, and collections of all payments. For more information on setting up a collections department see Setting up a Collections Department for Your Business.
Record, Monitor, Track
Again, each business will have unique tracking, monitoring and recording needs, but making sure to keep these types of records will also help your business stay financially profitable. For example, you may want to keep track of sales-to-expense ratios on a monthly basis, so that you know when to adjust your spending. And you’ll probably want to create routine quarterly financial reports with a balance sheet and profit/loss statement. Calculating accounts receivable and accounts payable can help a company stay on top of working capital and cash flow. And don’t forget to place these records in a safe and organized place so they are easily accessible and read.
For all of your small business financial needs, contact the experienced attorneys at Smiley Law.