Five Financial Tips to Help Grow Your Small Business
Author: Siân Killingsworth / 4 Apr 2019 / Personal Finance
Financial management – especially for small businesses – can be a daunting task. That is why at Ubiquity we have made it our purpose to help make your retirement savings work for you. Our organization specializes in selling 401(k) plans to small businesses and entrepreneurs.
401(k) plans help small businesses attract and retain the best of the best employees. More importantly, small business owners can make good financial sense with a 401(k) plan without incurring additional training requirements and risk associated with inexperienced workers.
Since 1999, we have established several diversified 401(k) plans to help grow small businesses. We pride ourselves on each retirement consultant having knowledge and experience in retirement savings and financial management. Our unparalleled commitment to helping our clients is unmatchable.
That is why during this Financial Literacy Month, we offer these exclusive tips to help you in your business growth.
#1. Simplify your accounting process with streamlined tools.
The most crucial aspect that comes with owning a small business is the accounting process. It involves accurately documenting financial transactions in a comprehensive and systematic manner. The steps involved include:
- Opening a bank account
- Tracking your expenses
- Developing a bookkeeping system
- Setting up a payroll system
- Analyzing any import taxes
- Coming up with ways to be paid by clients
- Establishing sale tax procedures
- Calculating your gross margins, and
- Evaluating your business methods.
Accounting is of paramount importance as it helps put complicated financial transactions in a format that can be easily understood. Not surprisingly, it can definitely also be one of the most boring and annoying parts of running your own business. In fact, almost half of small business owners said bookkeeping was their least favorite task.
And the more time the business owners spent running their businesses, the more they loathed the task — 58 percent of business owners working 60 or more hours a week said that bookkeeping was particularly draining.
Luckily, there are lots of all in one accounting tools out there to help manage your small business financials like Intuit Quickbooks, Freshbooks, and Sage.
#2. Sales Forecasting is Paramount.
This process entails estimating future sales. Every business must anticipate its viability in the coming years in order to make adjustments accordingly. Since 1999, Ubiquity has helped many small businesses to make informed retirement decisions based on long and short-term performance.
It is easier for any profit-oriented organization to forecast its future by use of its past sales data. This begs the question, “what about new businesses that do not have sufficient past sales information?” Of course, these setups can use advanced methods such as competitive intelligence and market research techniques to make a sales forecast.
#3. Tighten up your cash flow management
Cash flow management, as the name suggests, involves tracking the money coming in and out of a business. This process helps in the prediction of how much money will be in your company in the future. Notably, it helps to know how much money a small business will need to cover its debts. The process entails:
- Measuring the cash flow
- Improving receivables
- Managing payables, and
- Surviving shortfalls.
Cash flow management is vital because it helps business owners in maintaining running capital. It’s important to know your breakeven point (where your revenues meet youur expenses) and to pay attention to it as you grow your business.
#4. Streamline your human capital management
Human capital is a fancy term used to skill and experience gained by individuals that is crucial to a small business. It involves a measure of education, capacity, skills, and attributes that affect an employee’s earning potential and productivity capacity. Luckily there are an incredibly wide range of cloud-based solutions to help simplify your all your HR tasks. Make sure to take your time when comparing HR solutions and review all the details to make sure you find a product that gives you exactly what your small business needs.
#5. Keep Up With Paper Work
The Power of Balance Sheets and Profit Loss Statements
Balance sheets are an accounting tool which is a statement of business’s liabilities, assets, and equity at a particular point of time. In simple terms, it explicitly provides a financial position (net worth) of a small business at a moment in time. This data helps keep track of company performance because it covers all the operations of a business.
A Profit Loss Statement (sometimes called a P&L statement) outlines the costs, expenses, and revenues incurred during a certain period. This duration can either be a fiscal or calendar period, quarterly or annual interval. It is synonymous to the income statement and outlines an organization’s financial position. Sometimes people confuse P&L statement with a balance sheet, but as you can see, they are nothing alike.
Overall, the aspects above are very crucial for any business, but especially for the small business owner.
Want to learn more about retirement planning for small business? Get the Definitive Small Business Guide to 401(k)