Even though the worst is behind us, companies today still need to exercise caution when it comes to finances. One thing that this pandemic has highlighted is the fact that companies with good financial management skills will be more successful than those with poor management skills. We’ve seen this in action with businesses folding within the first few months of lockdown orders being issued.
While the reasons for businesses folding can vary widely, it’s important for companies now and in the future to adopt some better financial skills. To help with that, here are some ways for small and medium sized businesses to improve their management skills.
Just as we are aware of when payments are due for loans and credit cards, you still want to be diligent about paying your bills on time for businesses. From tax payments to utility bills, set re-minders as often as you can.
Every business across the spectrum is struggling in some way financially right now. While your decision to pay a bill on time may or may not affect a companies well being, we both know that every payment these days counts. Furthermore, you have extra incentive to pay bills on time as companies can and will still charge late penalties in the event you miss payments.
When it comes to small businesses, many are guilty for mixing in personal finances with their business expenses. While you could have the best of intentions for your personal money to fund your business, this can complicate things in the future.
Even if segregation between personal and business finances isn’t needed from you, it helps to have separate bank accounts and books to help you monitor your cash flow. This allows you to set more accurate financial goals and budgets and follow them accordingly.
The smarter your budgeting system and choices are, the more you’ll be able to manage your finances better. When making a budget, you are inadvertently helping yourself in being a better negotiator and over time a better budgeter as well.
You can also enhance your skills by doing the following four things:
It’s common for small and medium business owners to pour all of their money into their business and neglect paying themselves. However, that’s not a wise thing to do. As the owner, it’s important that you do pay yourself along with your employees. That being said, you can be more flexible with your own pay during these times of hardship.
Even during these difficult times, there are many opportunities for companies to grow in various ways. It’s smart to set aside a budget specifically for these opportunities. It can be things from getting new software to a new sales technique, investing in resources now can help future growth in the future.
It’s easy for us to get lost in the daily operations, but it’s important that we also remember why we started a company in the first place. We all have plans for the future and not to just pay more bills. If it’s been a while or you haven’t done this, do it: sit down and list off your goals and plans for expansion. Break that down into a small list of short-term and long-term financial goals to help you stay on track.
While these little habits may not amount to much right now, the world of finance reminds us that it’s these small actions early on that play a significant role in our future. So practice all of these small things and you’ll find things will start to change more as time goes on.