Are you struggling to balance the books? It seems like all business owners are finding it challenging to manage their finances in today’s world.
This blog will discuss some of the ways that you can start getting yourself back on track financially and increase the financial health of your business at the same time. And beyond managing debt, these tips are a great way to grow your business, too — as well as ensure you get top dollar for it, should you decide to sell your business via Crestone Business Group in the future.
Know where you are.
The first thing to be able to improve your finances is to know exactly where you are today. It’s likely that you already have a business plan from when you started up, but once the company gets going, these are often forgotten.
Make sure that you update your business plan at least once a year to ensure that it’s still realistic and keeps you focused on your long-term goals. And take advantage of the easy-to-use software available today to stay on track of your finances. All in all, these ensure that your business maintains financial viability and, in the process, increases in value.
Maximize your income.
If you are not meeting your income goals, first you need to analyze why that is. Are you selling fewer units than you had planned for? If you have a varied product mix, are you selling more lower-tier products or higher ones? As well as your income, are your customers paying you on time? This will help you see if you have any improvement areas in your current strategy and let you know what you can do today.
You can also consider setting up new revenue streams. Are there new products that you can launch or markets that you can target? If you have established a loyal customer base, do you have enough of an offering to ensure that they keep spending with you?
As well as your products, you should be reviewing your pricing, especially if you haven’t done it in a long time. Is it still competitive with the market, or are you underselling yourself? Sometimes small pricing changes can make a significant difference, so try testing out new pricing levels and monitor how they perform.
Reduce your expenses.
Once you’ve reviewed your income thoroughly and seen any areas for improvement, it’s time to cover your expenses.
You should have a detailed budget that covers all of your expected expenses, including the timing. Make sure you’re allowing for a level of discretionary spending suitable for your activity, as there will always be some.
If you have any debt, it’s essential to track how much money you owe and what interest rates you are paying. Do a detailed inventory of all your pending repayments, and see if you need to renegotiate your payment terms or consolidate debt to benefit from lower fees.
Make sure that you are working with an optimal tax structure. This is an area where it might be worth it to consult an expert, such as a tax advisor or a CPA. They will be able to tell you if you are taking advantage of all of the deductions available to you and if your business setup allows for the most efficient tax structure for your activity. You might also consider setting up an LLC, as they benefit from reduced tax rates as well as less paperwork. And if you don’t have the time and the bandwidth to figure out how to form an LLC yourself, know that there are cost-effective services that can help with the filing.
No matter where you are now, there is hope for a financially healthy future for your business. If you take the time to get your finances in order and make some changes today, you can enjoy stability and a flourishing business that lasts well into retirement. And if you need more guidance in keeping your business financially healthy and increasing your potential ROI in the future, see how Crestone Business Group can help. (719) 799-6488
Brittany Fisher has spent more than 20 years as a CPA. She runs her own site, Financiallywell.info where she shares her knowledge about taxes, personal finance and general financial literacy hoping to help anyone who may benefit from it.
