Having healthy finances is one of the biggest issues for modern companies. Even if a brand features incredible products or provides top-notch services, it might go under due to poor financial decision-making.
“Approximately 33% of small businesses in the US lack the capital to run operations smoothly,” warns District Advisory, outsourced accountants from Washington, DC. Given these figures, it’s not surprising that 20% of companies are closed within the first year of existence.
While managing finances is always challenging, there are ways to make things easier. In this article, we share the best tricks for improving your company’s financial position and long-term outlook.
1- Acquire initial money
The best way to get things off the ground is by getting a favorable loan. Depending on the industry you’re in, you might have a chance to apply for incredible government programs. Agriculture is one of the fields that the government always subsidizes, but you should also check the terms for your industry.
However, the safest way to go about things is by borrowing money from your family or angel investors. In this case, you down have to worry about annuities and interest rates, which will give you more leeway for financial maneuvering.
2-Consider crowdfunding
In the last few years, crowdfunding has become one of the best ways for innovative companies to gather initial resources for their projects. While this approach doesn’t work for all commercial brands, it can be a difference-maker for products and services geared toward younger consumers.
The best thing yet, crowdfunding doesn’t come with debt.
3-Recover outstanding payments
Sometimes, the financial problems stem from external factors instead of internal ones. B2B and B2C clients might owe you money for products and services, damaging your cash flow. Ideally, you should try to collect all unpaid invoices as fast as possible. Additionally, we suggest you shorten due dates so that the money is available sooner.
If you’re unable to collect the debts, you should also consider hiring a debt collection company. This is the best way to squeeze as much money as possible from partners currently struggling with liquidity.
4-Sell extra assets
A company should always be on top of its equipment, properties, and supplies. As business requirements change, it isn’t uncommon for businesses to relinquish some of their assets in favor of cash.
One practical approach, and often the cheapest way to liquidate a company, is by selling some of your old equipment, you can also stop renting storage units. The best thing you can do is to auction valuable machinery. Online sales can also be a good option as they would help you get the best price for smaller items.
5-Optimize inventory
New businesses often struggle with inventory. Management might invest too much money into supplies or might overproduce. When that happens, your liquid cash becomes imprisoned in non-liquid objects that are hard to move.
Nowadays, there are lots of different programs that can help you monitor inventory. They are fantastic for larger companies working with numerous suppliers and buyers but can also work for smaller brands struggling with this particular issue. Whether you need additional storage space or if you’re looking for a safe place to store your excess retail inventory, getting a shipping container hire is a smart investment and a superb storage alternative.
6-Consolidate debt
Debt consolidation is an excellent tool for companies that take loans from several financial institutions. In these cases, you can mix several debts into one, which will not only simplify the payment but might also save you some money. Still, don’t be hasty during the process, as you don’t want to further increase your obligations. Ensure a smooth and well-informed consolidation process with the help of the experts from topinsolvencyfirms.co.uk.
You must know what should you do when you are served, which is why hiring an expert will always be the best option.
7-Modify prices
Price modifications are usually the best way to improve your financial position.
Price policies are also fantastic for your overall strategy. For example, you can lower prices when you want to dispose of hard-to-sell products or want to penetrate the market. Raising prices is an excellent way to accrue more resources for future projects, although it might alienate some of the consumers.
8-Focus on payment flexibility
One of the main reasons some brands struggle to sell is because they aren’t flexible enough. Keep in mind that some consumers can’t buy your product straight away and, instead, have to rely on delayed payments.
Besides offering different payment plans, you should also try to incorporate additional payment options. For example, while traditional credit cards and checks are fantastic, you should also provide support for digital payments and cryptocurrencies. Having used various credit card machines over the years, I’ve learned that not all are created equal. Some have hidden fees, while others might not integrate well with your existing systems. It’s crucial to do your homework before committing. Thankfully, the comprehensive guide by Business Financed on credit card machines for businesses provided clarity on the subject.
9-Outsource when you can
It’s shocking that some companies still shy away from outsourcing. Hiring external teams is excellent, like an outbound call center team, for delegating specific tasks and reducing micromanagement. Furthermore, by hiring foreign teams, you can also save a lot of money without compromising service or product quality.
