To improve your company’s financial health in 2017, consider these five tips for helping you reach your goal.
BE AWARE OF YOUR DAY-TO-DAY FINANCIAL SITUATION.
If you don’t know on any given day your profit margins on new and existing customers and the cash flow from these customers, your business could be in danger of failing rather quickly. You need to create and use financial statements and forecasting tools. For help, turn to community resources such as the WBDC.
SPEED UP CASH FLOW.
Managing your cash flow is critical, not only for daily operations but to qualify for financing. Are you collecting from your customers quickly enough? Are you paying your suppliers faster than you need to? A cash flow analysis, combined with an effective cash flow system, will help you manage funds to cover operational costs and identify potential problems.
ELIMINATE UNNEEDED EXPENSES.
Some expenses can be delayed or postponed altogether. Do you need your own office, or would it make more sense to begin by operating from your home or a co-working space? Do you really need that splashy, costly marketing campaign, or can you accomplish the same results more inexpensively? Be ruthless in your assessment of what to eliminate.
CONSIDER A SMALL BUSINESS LOAN.
If you’re serious about business growth, you’ll likely need financing to help with cash flow for additional salaries or new equipment. If traditional lenders are not an option at this time, consider financing from a community-based organization, including the WBDC, until you qualify for a traditional bank loan. In the meantime, develop a relationship with a banker, improve your personal and business credit score, and update your business plan.
KNOW YOUR LONG-TERM VISION.
Is your goal to maximize the value of your company so you can merge it, sell it, or pass it on to the next generation? Do you want to operate the company yourself for the rest of your career? Is your vision to stay relatively small or grow? As the old saying goes, “begin with the end in mind” but start planning for it now. Effective transitions can take 5-10 years depending on the size and complexity of your business.
The year 2017 can be a banner year for you and your company if you have the right mindset and financial knowledge, know your end game, and have a plan to reach that destination. Above all, know that financial acumen is a learning process. Keep asking yourself how you can continue to create value through your company and pat yourself on the back as you steadily make progress.
Emilia DiMenco is president and CEO of the Women’s Business Development Center, an organization that provides services to prospective, emerging, and established business owners, including workshops, business counseling, and annual events. For more information, visit wbdc.org.