Financial management for small businesses is even more critical than with larger corporations. The sad reality is that smaller companies have less access to lending to provide a rescue plan when the finances aren’t managed properly. This puts smaller operations at greater risk because a few wrong moves in the financial management arena and the business won’t survive.
Here are a few suggestions on how to better manage the finances.
Know what you’re doing
Having a deep understanding of managerial accounting, managing cash flow, the financial markets, and corporate finance provides a solid grounding for business owners or staff with broad responsibility for the finances of a company. A course like the Ohio University masters in financial economics covers these topics to help people learn how to manage the company’s finances, invest any profits to protect them, and potentially grow their value in the future too.
Studying using the Ohio University Online course structure makes it simpler for key employees to advance their financial understanding to benefit the company they work for. The degree can also be a stepping stone towards a full CFA qualification, too.
Many SMEs go under due to theft
Managing the company finances and taking care of the assets of the business is important. With SMEs, many go bankrupt, not because of poor trading but due to employee theft of physical assets, intellectual property, and other malfeasance. When all the assets of the business are managed carefully, it is less likely that businesses will lose them. This leads to improved job security for all because the company is more financially secure.
Running a lean operation is important for companies of all sizes to avoid overspending. The good times don’t roll on forever, so retaining more earnings (or least not going into debt due to poor practices) helps keep the company’s books in good standing.
Running lean can mean using competitive bidding when making larger orders to get better pricing. Building out new product concepts on a smaller scale to see how the market responds to them before committing considerable financial resources is also sensible. Be minimalist with purchases within the office and buck the trend by purchasing previously used desks or cabinets rather than new ones; call it “environmentally-friendly” if some staff grumble about it.
Better rates & lower fees
The banking system is modernizing through the provision of alternative financing options for business lending and different checking account facilities. Look for ways to reduce the cost of banking in the business. If there’s borrowed money through overdrafts or loans, are the rates competitive? What fees is the business incurring unnecessarily, which can be reduced or eliminated by switching providers or managing the finances more carefully in future?
Curtailing the easy spending of money in a business is something that too few owners focus on. In the pursuit of growing the customer base and pushing the revenue up, they often lose sight of the smaller things like reining in costs. Don’t let that be you.