There are a dozen different answers to the question: what is most important in business? Some will say marketing and marketability is crucial to any product or service. Others will say it’s all about customer satisfaction. They might say it’s about having a qualified team suited to the task. But there’s one thing that keeps all of the above running. Money. If the fuel of the business. As they say, cash is king. So you need to start keeping more of it in the business.
Closing those cashflow holes
It’s not an uncommon scenario. A business is doing well and even growing. It’s proving profitable. Only, you’re not sure where those profits are. Keeping an eye on your business finances is about more than keeping every invoice and expenses form. It’s about identifying existing cashflow holes that are keeping more of your money from you. Teams like the GNS Group recommend taking a closer look at the common source of cashflow problems.
Are you chasing down your debtors?
Do you have any unpaid works in progress holding up your incoming cash?
Are you decreasing the amount owed to creditors?
Businesses can acquire a lot of financial loose ends if they’re not paying attention. Make sure to close them as quick as possible so you know what your actual situation is.
Keeping your eye on the ball
Once you know the money you really have, the net worth of the business, it’s about trying to keep it as high as possible. There are some expenditures you can’t avoid, but even those can have more use made of them. For example, if you’re paying employees, you want to ensure their rates of productivity is making up for their wage. Consider not just how much you’re paying, but track what you’re getting out of it. Setup key performance indicators and short-term goals to measure productivity in real time. Then act on problem areas and measure it again.
There are plenty more ways to not only spend smarter but to spend less in business. For instance, when you’re buying equipment and furniture for your business. Are you buying new or second-hand? Being more frugal on these kinds of expenditures means a lot more money still in your pocket. Provided that you’re able to inspect the purchases and ensure their quality, of course. Bartering is also an essential skill of the frugal businessperson. If you have partners or service providers, then see if you can’t negotiate a better deal with them. If you can, then provide stats from competitors with better pricing. Business 2 business providers value long-term customers and are almost always able to provide a bit of wiggle room. There are always savings to be made in business, never accept anything at face value.
With the right organization and advice, becoming a much more money savvy business owner isn’t too difficult. It’s all about knowing how to organize the money you have at the moment. As well as how to spend less of it to achieve the same (or better) results as before.