Get your company’s finances under control in these 6 steps
- Over the next three to five years, 70% of US entrepreneurs expect to grow at least 25%.
- There are many things that can impact a company’s growth plan.
- Getting finances in check is the first thing on the list.
Creating a plan for your company’s growth and sharing it with the right people. Paying attention to what online customers are telling you about your pricing. Making sure you’ll have enough money in the bank to make payroll..
These seemingly varied areas are all key aspects of managing your company’s finances in a way that promotes growth. Over the next three to five years, 70% of US entrepreneurs expect to grow at least 25%. These six strategies for managing your company’s finances can help make sure you do so in a smart way.
Understand your financial statement
Here’s a startling finding: Most entrepreneurs who name a business reason rather than a personal reason for their company’s failure point to financial mismanagement as the culprit. A significant number of small business owners say they don’t review their financial statements regularly (some don’t know how to read them). That’s like a baseball manager not understanding the box score of the game. Getting a grasp of your profit and loss and balance sheet enables you to steer the company for growth. But remember, you don’t have to do it alone. Ask for help from a business banker, CPA or fellow business owner if you need it —they may be able to offer invaluable insights.
Develop a growth plan
You likely have a business plan, but do you have a growth plan? It identifies opportunities for growth and develops key metrics for achieving it. It should also determine how your expansion goals will affect financing, staffing, and marketing. Your strategy should be shared with external partners and advisers. That way they can fine-tune their strategies to be in concert with yours.
Automate wherever you can
Time is money, and the more you can put your good financial habits on autopilot, the better. Whether it’s building automated financial reports, automatically moving a percentage of revenue to your savings account, synching credit card purchases to your accounting software, or even just setting up quarterly check-ins with your banker or financial advisor, your future self will thank you for getting things in order.
Price more accurately
Pricing has derailed many growing small businesses. When small businesses start out, they often set their prices too low to attract new customers, or because they failed to factor in certain costs. As they grow, companies are often afraid to raise their prices for fear of losing customers. Pricing is a delicate balancing act. Industry benchmarks, reviews of competitors’ prices, and your own financial projections should guide you. In addition, the real-time nature of e-commerce creates unprecedented opportunities to gain deeper, actionable, and real-time insights into their product assortment and pricing mix, according to a new report from Euromonitor International. Every day, customers tell you what they want to buy and what they’re willing to pay — listen to them.
Invest in your customers
Small businesses that hit the critical five-year mark are twice as likely to spend on marketing, advertising, and social media as companies that fail. And business owners who don’t make the five-year mark say they regret not spending more on customer service. The point is clear: While you certainly want to spend cautiously, prioritize your budget around attracting customers and keeping them happy. That is always money well spent.
Get the support you need
You can’t be expected to do it all — and to try to do so might be foolish. Surround yourself with a trusted team and get comfortable with asking for help when and where you need it. Whether it’s outsourcing expense reports to an administrative assistant, bringing in a bookkeeper, or meeting with a business banker to make sure you’re on track for your 2020 goals, your team can help you face the facts when it comes to finances.
There are a number of factors that go into managing your company’s finances. The key is to get a handle on them so that you can develop a solid plan for growth. That will dictate where you should devote your resources to the best advantage.
This post was created by Insider Studios with Capital One.