Spring is almost upon us, which means it is time to refocus now that the hectic post-New Year months are behind us. Forget those failed New Year’s resolutions and instead concentrate on forming new habits for your business – then stick to them!
Whilst it might seem logical to implement changes to your business at the beginning of the year, it is not always as effective as some may think. It is still far too cold to feel motivated, work routines are often disrupted around Christmas and seeing in the new year, plus illness and the cold winter months make it hardest to be buoyant in the initial first few months of any year.
Unsurprisingly, around 80% of people fail to stick to their New Year’s resolutions for more than six weeks and there is actually psychological reasoning behind it. Apparently, people often fail due to either overthinking the difficulties involved or because they leave themselves mental get-out clauses.
Now, whilst that may be an option for this year’s resolution to lose a pound or two for the summer months, the success of failure of which is not life-threatening, it simply is not an option when it comes to business. For lots of SME owners out there, change is essential if their business is to stay afloat.
So, with the arrival of Spring, comes the perfect time to introduce change for the better and what better place to start with your business than your finances? In order to thrive this year, it is important that you have a healthy inflow of cash, which means you need to know exactly what is happening in all areas of your business.
Below are the 6 most efficient ways to clean up your books:
1. Set Goals
Now that the calendar year is well under way, you will find that you are better equipped to make business forecasts for the next financial year. Where as Christmas can be a slow time for some businesses, many are struggling to find their footing after a frantic few months – it is very dependent on the industry your business operates in. Take time now to look back at the whole of the previous year. You have more historical data now to analyse whilst making this year’s important decisions.
Access figures from the first three months of the year and last, quarter by quarter, including cash flow statements, balance sheets and a profit and loss breakdown, then use this data to get an idea about patterns your business is following so far. Where can you see patterns? Is there seasonality?
These insights will not allow you to become totally immune to financial business stress but will help safeguard you for the future and should help you predict the financial outcomes of this year. Treat them like the business blueprint to live by if you are to avoid any unexpected hurdles over the following months.
2. Renegotiate Payments Terms
The world of business is all about negotiating. Never settle with something just because it has become the norm for your business. Take a look at all of your payment terms, including insurance policies, rent and loans, then see if you can make any positive changes. With research showing that the average time it takes a customer to pay is 74 days, businesses are up against it. Spread your outgoings to match your incoming payments so you can close cash flow gaps where possible and if dates cannot be changed then you may want to consider using external finance to bridge those gaps.
If you typically always rely on banks to get you through the harder months, do your research and educate yourself on the other options available to you. Alternative business finance providers, such as us here at Nucleus Commercial Finance, are enabling many SME’s the opportunity to access funding where banks have failed to step up to the mark.
3. Access Financial Help Before It Is Too Late
Sadly, there still is not enough education and awareness around seeking finance. Most SME’s are not aware of all the funding options available to them and lots of business owners still consider external finance to be a daunting prospect or are concerned about the stigma attached to borrowing money for their business.
Small businesses are not always strategic with when they access finance and as a result, often only end up seeking it when their business is struggling and the need is urgent. If alternative finance is seen as a second option after the bank. Because of the time taken to wait for an answer from a bank, this can also add valuable time to the process and adds to the problem of not prioritising looking for finance until the last minute.
The best way to tackle this is to plan better. Do both yourself and your business a favour by shrugging off the stigma attached to using external support and make sure that you seek financial assistance before you need it, so it is already in place for the time you rely on it and you can make an informed and considered decision.
4. Embrace Technology Thanks to technological advancements, finding and obtaining business finance can be done with ease and speed. Investing in some new technology might seem expensive with up front costs being high but long-term it is a great way to save money and take control of your business finances.
Investing in technology for your business will make tracking your business finances incredibly easy and there is an array of software solutions available to you. Cloud accounting software can make tracking expenses and income so much easier, which means you will save time on the simple tasks that can be automated and be able to focus your efforts elsewhere. Remember, time is money, after all.
Rather than relying on an external accountant to put the numbers together, you will be able to get immediate access to the business finances from anywhere, you can even log in remotely on different devices, thanks to the many accounting software platforms and easy to use apps out there. These tools also help to ensure that you are more hands on with the business finances and the best way to be tuned in to any issues is to be familiar with the natural peaks and troughs, incomings and outgoings by viewing regularly.
5. Chase Up PaymentsYou may run a business that means you do not charge customers upfront. For many businesses, the payment terms they give to their customers often exceed those awarded by suppliers, which can result in a cash flow problem.
Stay on top of due payments and try to send invoices to your customers with plenty of notice so that they do not end up in hot water with late payments arising unexpectedly. If your business does not receive payments immediately, do your due diligence and make sure that your customers understand your late payment terms beforehand.
If you regularly struggle to keep your head above water when waiting for customer invoices to be paid, it may be a good idea to seek business finance. There are finance providers out there who have products specifically geared towards this common problem and solutions, such as invoice finance, are perfect for business owners who are looking to bridge the gap between credit terms for customers and suppliers.
6. Do A Price Check
Having prices that are too high is always a big no-no, especially when the market is so competitive, with globalisation and the digital world. Equally, having prices that are too low can be just as damaging to your brand and overall profit margins as it is synonymous with poor quality and does not feel psychologically, luxurious.
Knowing how to price a product will set you apart from your competitors, so make sure you are getting it right if you are to generate the most revenue. The best way to ensure you are spot on with your prices is to conduct market analysis. As a business owner, you should be regularly keeping up to date with competitors in your industry and that includes being aware of any fluctuations in the market.
Check out what your competitors are charging, decide on a price and then work out your business’s profit margin to determine whether your prices will bring in enough money to cover the overall cost of running your business. Remember, ultimately it is all about the bottom line.
Putting the time and effort in now to Spring clean your business finances and forming healthy habits will certainly have a positive impact for the rest of the year and continuing to do so every year will ensure that your business has the best chance at thriving in future. The pounds you save from getting your finances together now can be spent on growing your business further.
If you are experiencing cash flow challenges or want to realise your business growth plans, get in touch with our team of Funding Specialists today on 020 3820 0205 or email firstname.lastname@example.org.