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8 Tips for the Financial Success of Small Businesses

Running a small business can be tough, frustrating, and requires most owners to wear multiple hats.

While most owners are comfortable being involved in sales, marketing, production and even HR, many feel completely out of their element when it comes to financing.  While this is an area that’s typically better left to those with the necessary training and experience there are some basic things that every startup business owner should do in order maintain a healthy cash flow and positive bottom line.

Use Dedicated Business Accounts

For your small business to thrive, it’s essential that you’re able to accurately track all of your business income and expenditures.  Use an accounting program that works suited for your business type and one that will always be up to date.  Cash flow is essential to keeping a business afloat and allowing for continued growth. The ability to keep up with   customer payments and accounts will enable you to quickly see where your financials stand and keep up with collecting delinquent accounts that can hurt your ability to do business.

Stick to a Budget

You probably already have a personal budget. Keeping one helps you to prioritize expenses by separating needs from the wants. The same applies to your small business. Having a formal budget helps you prioritize your spending.  Fixed expenses like rent, payroll, insurance and production have to be consistent, and again, cash flow is the bloodline of any business.  Budgeting extra expenses can help keep your cash flow positive for what is needed versus what you may want.

Prepare for the Unexpected

Don’t wait to be taken by surprise just because you underestimated your expenses. When creating your budget, it’s always best to overestimate your expenses a little in order to cover any unexpected cost increases and incidentals.

Be Prepared for Downturns and Bottlenecks

Every small business has its ups and downs.  For some, the reason is seasonal factors that influence their market.  For others, slow-paying customers can have a negative impact on cash flow.  While seasonal fluctuations are easy to anticipate, cash flow problems can arise quickly and unexpectedly.  When they do, having an established relationship with a lender can be a lifesaver. Working capital is crucial for a business to continue to thrive and grow.  If borrowing from a traditional lender isn’t an option, you might consider invoice factoring to get the cash you need to meet your daily operating expenses during the slow times and to invest in new equipment, warehouse space or personnel.   The upside is that you are using future revenue to fund the business and incurring no extra debt.  Keep thinking CASH FLOW!!!

Seek Professional Advice

Sometimes managing big numbers, accounts and cash flow can be overwhelming. Don’t be afraid to ask for help. Trying to muddle through can be disastrous for your business. You can hire temporary accounting specialists or a CPA that can help with the financial side of your business. It is better to spend some of your budget getting help before you have a cash flow problem that cannot be fixed.

Look at Alternative Investments

Don’t put all your eggs in one basket. Diversifying your investments will boost your savings plan while at the same time providing you with something to fall back on. Financial stability  is not always predictable and it is important to avoid a failing business by having more than one investment to fall back on.

Time Management

You’ve no doubt heard the saying “time is money”. The amount of time you put into your small business is directly proportional to how well and how quickly it will succeed. Invoice factoring can be a big time saver for business owners.  Getting your money up front by selling your invoices to a factoring company allows you to continue business operations and spend less time trying to collect on payments.  The invoice factoring company will wait for your customers to pay and you can do business as usual.

Savings Plan – Create a Cushion for Emergencies

Finally, the joy of every business owner is when you start making a profit out of your hard work. Being able to constantly and progressively build a cushion is proof that your business is not hopeless after all. What’s more, savings are like water you store to be used in times of drought. A healthy savings account can get your small business through economic downturns, the loss of clients and other unexpected events.  Having cash on hand when needed allows your business the ability to take advantage of opportunities that will benefit your business.

Call American Receivable about invoice factoring at 1-800-297-6652 or visit us online at   to learn more about invoice factoring and whether it’s the right solution for your cash flow needs. 

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