So you’ve made some money in your business. The name of the game is using that money to grow your business. Here are some simple ways you can financially grow your business, plus some changes in mindset that will help you leverage the business to be the best it can be.
Spread Out Payments
Paying bills at the same time drains disposable income. This can put you in a situation where you can’t pay your creditors if something were to happen. Try to pay bills closer to due dates. Also, it’s a good idea to put it in the vendor contract that you want to extend payables to up to 90 days. Now some vendors will give you discounts for paying bills early. If this is the case, ensure that you pay them before the due date every time. Pay the most essential bills such as rent and paying people on your team. Then pay off the less important bills.
Be Diligent About Payments
To improve your cash flow, you want to give your customers incentives to pay early. What you are looking for in vendors, ensure you give to customers. If they pay early, offer discounts. You may also want to require a deposit from customers when they order something. There’s no reason in this day and age that a customer can’t make a rapid transaction with their credit card online. Electronic billing will allow you to create invoices that are customizable. You can also set up automatic payment reminders for customers.
Be Wise About Credit
You’ve got to be mindful about extending credit as a business. If you have a customer who doesn’t pay, this can really hit your small business hard. Be aware of the repercussions of not having that money in hand. Make sure that you have a written set of guidelines to determine who is eligible for credit.
Make sure to stick to your guns and be strict about it. Require a credit check for new customers. Don’t just extend credit to anyone who is willing to buy from you. If someone is paying late, identify them and extend a few of your payment options to make it easier for them. It would be ideal if you could get them on a payment plan that automatically takes money from them bi-weekly or monthly.
Payroll and Revenue
Depending on your type of business, you’ll want to manage your money in certain ways. For example, a restaurant or store will make money every day. This means they can cover their expenses for their weekly payroll fairly easy. If you’re a manufacturer, this won’t be so easy. It might be best to pay employees less if it’s legally possible in your area.
You have to stay ahead of things. Expect that the unexpected might happen at any time. Cash flow varies, and expenses might pop up that you never thought of. A rainy day fund with at least three months of operating expenses is recommended. In case business is slow or an emergency happens, this money socked away is invaluable. Try things like using your business credit card or line of credit to pay daily expenses.
This helps you keep the cash flow you need. Monitor expenses with online banking and monthly statements. A cash flow forecast is important too. A one-year prediction of the money that moves in and out of your business is ideal. This allows you to keep in mind what you can and can’t afford. It also helps you create realistic goals of how much money you need to be bringing in.
Growing Your Business with Your Employees
As an entrepreneur of a small business, you probably do a lot of things. This, of course, takes you away from the things you excel at. The core work of the business is really what you should be doing if you want to see it grow. It might be best to get freelancers who can help you manage the mundane tasks that take up a lot of time. It might be hard for you to give over that kind of control, but if you truly want to turn your company into a big business, you’ll need to let other people help you out. Bring in experts who know their trade.
Join in With a Larger Partner
As a small business, you might want to consider partnering up with a well-established company. They already have a footprint and all the resources that help create incredible growth. It could be a major game changer. Resources can include manufacturing facilities, channels of distribution, and a good reputation. It might not be easy to negotiate with a larger partner, but you’ll be meeting your end game, which is to grow your business. This option could catapult it.
You might want to orchestrate a merger as well. Whatever your ideas are for growing your business, make sure you pay attention to finances. Use your money wisely, and ensure that you always get paid for work. There isn’t just one approach for growing your small business into a large business. Different entrepreneurs will do differing things. The type of business you have also plays its part on how you’ll create major growth.