Running a business provides many challenges, especially as you start to develop and grow your company. As the venture expands, you will face new trials that require different solutions, which can lead to avoidable errors. Finance is especially important during a period of growth, as you need to know what you are able to invest without unnecessary risk.
Managing your cash flow
A healthy cash flow is crucial for the survival and growth of any business. Without cash, you are unable to invest in the future and may find yourself struggling to survive. Maximising finance should be a key factor in your business plan, and your cash flow is the main objective. Credit control is essential, collecting overdue debts as soon as possible. Make sure that clients are aware of your credit procedures and that interest will be charged on overdue payments.
You may need to keep tighter controls on your stock levels, as surplus stock is costing you money. Periodically, clear out any stock that isn’t required and can’t be used at a future date. Consider changing to suppliers that can offer delivery just before it is required. Planning ahead will help you to see where any problems are occurring and deal with them in good time. You will also be able to spot any occasion when you need funding for the company.
Making changes
As your company grows, so will your client base. Although you will still need to gain new clients, you will also spend time cultivating a profitable relationship with your existing customers, who can provide a reliable stream of cash flow. An existing customer may be more likely to increase spending with your company, maximising the potential for profit. However, it can be risky to rely completely on existing clients, so diversifying into new markets will build continual growth opportunities.
You may want to consider outsourcing as the business grows, to maximise resources. Although you may have started the business by dealing with all aspects yourself, eventually you will have to consider a professional source that can deal with the accounting and financial services, so that you can concentrate on other areas of the company. The money saved by outsourcing could be used to invest in other aspects of the business.
By planning and forecasting, your business will have the opportunity to grow with minimal risk. If you would like to know more about finance management, give us a call today.