The words “struggling economy” sprinkle most news stories online and off when discussing the business climate and small business landscape in general in the U.S. If you look beyond the headlines, however, there are modest signs of an economic recovery that should be encouraging to you and other small business owners.
In a recent report by the Kauffman Foundation and LegalZoom the authors surveyed more than 700 small business owners and discovered that despite conventional wisdom, growth is real and happening. “The economy has moved in the past year—slowly, but trending upward, and here and there we can start to see flashes of a recovery in acceleration.”
Particularly encouraging, the report added, was the growing availability of credit, with only 28 percent of respondents citing a lack of access to credit as a reason for their bumpy starts in 2013 and into 2014; this compared to 45 percent of new business owners who named lack of credit as their biggest obstacle in 2012. While the freeing up of credit and those willing to lend money to small businesses is surely a positive sign in the years ahead, every company leader suffers through fears related to finding money, making money, and saving money or managing debt.
When it comes to money management tips and tactics, most prevailing wisdom on business success conveniently syncs up with the clients we have who have been the most successful. All seem to have these five things in common:
- Create a business plan to help stay focused, measure success, and revisit this blueprint when you see new opportunities arise. One thing all experts seem to agree on is the importance of a business plan if you need to seek funding from a third-party like a bank or private investor.
- Create a marketing plan that details how you intend to put your business plan into action. Nothing ensures a healthy, financially stable business like a proven plan for turning prospects into customers and keeping customers happy.
- Be sure to have cash on hand to weather shortfalls and plan for the future. It’s critical, according to Daniel Kehrer, founder & managing director of BizBest Media Corp. “One of the biggest mistakes growing businesses make is to run out of cash,” he said. “While the sun is still shining on your business or before your financial picture has a chance to turn sour, meet with lenders and/or landlords proactively to see if there are opportunities to restructure debt, payment terms, etc. Having cash on hand is critical for staying afloat and continuing to grow.”
- Be brave enough to hire where you are weak. You can’t do it all. If you’re not a good salesperson, find one. If you hate administrative tasks or managing people, delegate to someone you can trust to stay on top of it. But as you know, hiring good people on a budget is easier said than done. Priority #1 if you ask Kehrer is hiring someone to manage your money if it’s not your strong suit. “Lack of strong accounting and finance can be the only thing keeping you from reaching your financial goals,” he said. “Find well qualified people who share your vision and then step back and take their advice.”
- Have at least a basic understanding of cash flow. While experts and owners alike seem to agree that hiring an accounting pro or back office vendor to crunch numbers or manage account receivables and payables is a good move, the one bit of advice that is also consistent among small business owners is the suggestion to keep your own eyes on cash flow. After all, you’ll need a keen understanding of new business opportunities in the pipeline, closed deals and their purchase terms, operating costs month-to-month, capital expenditures and any seasonal fluctuations on the horizon so you can effectively meet payroll, pay vendors and make purchases to grow your business.
While there is no single recipe for small business success, the ingredients above have shown themselves to figure prominently in financially strong companies. These tips and tactics for money management are a part of the eBook – The Small Business Owner’s Guide to Managing Money, Time and Talent. This eBook is available for download here (free, registration required). The eBook highlights the proven strategies, hot tools and tried and true tips people in your shoes have used to be successful. We hope you find it helpful in your small business efforts!
About the Author:
eCapital helps B2B companies nationwide access their working capital and accelerate their cash flow through invoice factoring. With a passion for helping small business owners run a better company, eCapital’s online community shares small business resources, provides trends, and delivers practical business tips. Learn more at eCapital.com.