3 Common Financial Problems & Tips for Small-Scale Businesses - Guide
Updated: Dec 12, 2019
Small-scale businesses are often confronted with common problems such as cash flow, rising costs, and taxation on their day-to-day operations. Starting up a small-scale business can be risky, and maintaining it, in the long run, will entail some financial challenges that come along the way.
Because of this, monitoring the financial health of your business becomes imperative. As much as possible, you should have proper accounting and financial gameplan set in place. By doing so, you’ll be able to rise above all financial situations.
That said, follow the three financial tips below for your small-time business.
1. Cash Flow
Cash flow is said to be the lifeblood of a business. It refers to the money moving in and out of your business. Cash that comes in is from customers or clients who purchase your products or services. On the other hand, cash that goes out of your business is in the form of payments for expenses, such as rent, taxes and insurance, and other accounts payable.
Always make sure that you’re getting paid for your business and have a proper collection set in place.
Pay your suppliers on time. Properly allocate money to all your suppliers regularly.
Make sure not to hold your stock or any work in progress too long. Ensure that you convert stock into actual cash and get the work completed so your business can earn.
Have proper management reporting, review this regularly, and come up with effective budgeting.
2. Rising Costs
One major problem that every business faces are the rising cost of goods or services. Expenses required for your business will skyrocket overtime after you started. If you don’t enter the business world ready and prepared, it’s easy to get caught in a bottomless financial pit.
Take a closer look at what you’re paying. Make sure to shop around for insurance, telephone, and electricity with a better deal.
Review your bank loans (both business and residential) and look for the best deal.
Consider talking and negotiating with your suppliers for early payment discounts or volume discounts.
Assess and streamline your internal systems and processes to ensure that your employees and systems are productive and cost-efficient.
Update your budget regularly by thinking of better ways to save up.
3. Taxation and Business Regulation
No companies can get away without paying taxes. In most cases, business regulations continue to change. As a business owner, you need to be highly compliant in paying your taxes and keeping up with all business rules and regulations.
Read business news and press releases to get yourself updated on the changes to tax and business regulation that affects small businesses.
Subscribe to other publications that are relevant to your business or industry.
Make sure to keep your accounting records up-to-date by using accounting software.
Always speak with your accountant or adviser before you make substantial changes to your business or assets.
Managing through your finances can be quite tricky. The first thing to deal with your finances is to determine the financial areas to look into. These include the cash flow, rising costs, and taxation of your business. Then, have financial plans and strategies set in place to address the common financial problems. Consider the valuable financial tips, and see how you can regulate and augment the finances of your small-scale business.
If you’re looking for a business accountant on the Gold Coast, get in touch with us today! We’re happy to help.