Maybe business seems pretty good to you: Jobs are getting done, new customers are dribbling in, cash flow is positive. But are you growing? Or are you just treading water instead of really getting ahead?
A lot of little things can have a negative effect on small business revenues, even if they seem small. It’s possible that if you made improvements in just a few areas, you could have a major impact on cash flow and business growth.
Here are four things that you can start doing right now that could dramatically change your business finances.
For entrepreneurs who started their company at the kitchen table, it can come as a bit of a shock to realize that every dime that goes towards your business may not be significantly beneficial to the business. Small business owners need to be savvy about how they spend money.
Take a look at where you are spending and what you are getting for your money. Figure out your company wants versus what it needs.
Educate your customers
Small business owners often forget to formalize payment guidelines, especially if you’ve had informal handshake relationships in the past. Invoices should clearly show payment terms — and those terms don’t have to be Net 30.
The faster you invoice, the sooner your payments show up. Simple. Online invoicing can help to facilitate the process. But whatever you do, develop a strategy for tracking payments.
Make sure you also establish firm guidelines regarding nonpayment. Delinquencies can put a serious dent into cash flow and may even put your business into jeopardy. So, don’t avoid a delinquent customer and let it slide simply because it will be uncomfortable to confront them. Follow up with friendly written reminders and phone calls to let them know you are still waiting for that payment.
Delegate or outsource when it’s appropriate
While entrepreneurs are, by nature, people who think they can do anything that needs to get done, the best business people can also spot inefficiency when it happens. Knowing when to hire help — either outsourced or internal — is a sign of a smart leader.
Technology can’t solve all your problems. But it’s not just for large corporations anymore, and it can be a useful tool to create efficiencies and organization in many areas of your small business.
Are your employees in the field still giving estimates on paper? Are they able to take a credit card payment on the spot? Are you using cloud accounting to track expenses, handle payroll, manage the books?
Technology doesn’t work by itself. But things like credit card payments on the spot can improve cash flow, enhance customer service, and the data collected at job sites can help you plan for the future. The right accounting software can keep your financial data organized so that your books are clean and you have good insight into cash flow.