Good financial management can be a challenge for small businesses. With the passion and creativity that small businesspeople bring to their work, the nuts and bolts of exploiting revenue streams and controlling costs often take a back seat. Here are 5 quick tips for better money management.
1. Recognize your limits
Don't let enthusiasm for your field get the better of you. Energy, passion and love for your work are great (and necessary) virtues for the entrepreneur. But leave them to their own devices, and you can quickly get in way over your head. I've seen it happen. Before you know it, your business might start looking more like a hobby--an expensive one.
To keep on track, spend a few minutes taking stock of your financial and human resources. How much money do you really have? What can you realistically expect from your current receivables? How about tangible assets? A positive attitude can be a double-edged sword: great when it forces you to take on challenges that push the boundaries of what you think is possible, but potentially undermining to a realistic assessment of your capabilities. And that's when big money can start to fly out the door. Money you can't afford to waste as a small business. Recognize your limitations, accept them, and then push on them responsibly without breaking the bank.
2. Cut out the fluff
Focus on what you do best. In small business, it's terribly important to have a rock-solid idea of what you do, the value you deliver to customers, and how you're doing it. Part of that, though, is having a firm idea of what you don't do. Just like recognizing your boundaries, having a solid understanding of what your business is not will allow you to streamline your thinking as well as your operations. Once you can concentrate your energies on your "core competencies" you can save yourself a lot of financial headaches. Those are the kinds of headaches brought on by misguided "investments" and foolhardy purchases designed for a revenue model that isn't yours.
3. Worship money
Make the necessary cost cuts, even if it hurts in the short term. Exploit every opportunity available for stoking sales and closing deals. Think outside of the box on both sides of the ledger. You're in business to make money, right? Once you're done with points 1 and 2, you should be in a position to make the absolute most of what you have and maybe even a little more. Keep your eyes on the prize.
4. Be flexible
The only constant in business is change itself. Be responsive to change. Keep an eye out for new time-saving technologies, new threats to your established relationships with clients, and new competitors in the industry. Just when you've got it all figured out, the market will throw you a curve ball. Consumer tastes will shift. Your biggest client will go under. Whatever. Only those businesses most responsive to change will succeed. And this means keeping an eye open for threatening developments as well as easy-to-tap opportunities. That's when you'll start to leave less money on the table.
5. Get some outside advice
If you're like most small businesses, a fresh set of eyes and ears will give you a new perspective. Maybe the old routine that you've fallen into is actually holding you back more than it's helping. Maybe there are some fresh opportunities for cost savings that you didn't even realize. You want an objective voice, and someone you can trust. Your consultant or coach should be able to give you the insight you need, as well as the honest appraisal you might not want to hear, but that you know is right. Financial success might not be easy, but following these tips can get you there sooner rather than later.
