Running a profitable business requires you to keep a close eye on your finances. The more control you have over the money your company spends, the more you’ll be able to hang onto over time. The challenge for many business owners is taking the time to improve their financial practices. Overhauling your business finances sounds like a lot of work!
Here’s the good news: you don’t have to do it all at once. Start small, by implementing a few of the ideas on the following list. As you begin to feel the effects of these changes, you’ll realize just how good it feels to clean up your company’s finances—and that feeling will empower you to make bigger and bolder moves. We’ve saved a few of those for the end so that you can take your detox to the next level (when you’re good and ready).
Behold a simple but effective five-step process for cleaning up your company’s finances.
Five Steps for Healthier Business Finances
Step One: Budget, budget, budget!
Before you can learn to spend money more effectively, you have to understand how you spend money now. That’s why it’s vital to go through your records and look at where your cash flow is going. Core operating costs are probably unlikely to change much, but take a close look at any other spending and ask yourself whether it’s genuinely integral to your business model. For example:
- Do you need all that office space? Are you using every square foot, or could you save money by moving to a smaller location?
- How much does it cost to produce your products? Could you make cuts without sacrificing the quality of your goods?
- Are your insurance policies consolidated to simplify payments?
- How much money are you spending on digital marketing? Could you save by pursuing organic solutions?
Step Two: Plan for specific goals.
Saving money is much easier when you know what you’re saving for. If you have specific and identifiable expenses coming up, you’ll know how much you need to shave off of the areas listed above to meet them. You’ll also need to make sure that you have enough left over from your detox to keep running essential operations, so make sure you account for them.
Step Three: Get what they owe you.
Many businesses are in tough financial shape merely because they’ve been too lenient with the parties who owe them money. Do you have debts to collect? Collect them—now. Don’t be rude or anything… just send a friendly reminder to the people who haven’t paid you that you’re still waiting. Start with a quick email once every two weeks, then remind them more frequently if they don’t respond. Only take legal action or go to a debt collector as a last resort.
Step Four: Don’t be irate… renegotiate!
If your business has been around for a while, you probably have long-standing contracts with vendors or suppliers. You might have initially made those details when you didn’t have much negotiating power, but that might be different now that those parties have come to rely on your business. See if you can go back to the table and adjust the terms to save you money in the future.
Step Five: Get liquid.
It can be much easier to grow your business when you have liquid capital to spend. A business line of credit can allow you to keep essential operations funded while you make cuts to other areas, then pay off what you owe with the difference. Lines of credit are particularly beneficial because they don’t require you to spend the money as a standard loan does. You can use it when—and if—the need to do so arises, and you’ll only pay fees or interest on the outstanding balance.Does your business need a financial detox? Check out these five steps to healthier business finances! Click To Tweet
Detoxing your business isn’t nearly as hard as most owners think. Start small, but follow as many of the steps above as you can. You’ll soon find that your company’s finances are in a much better position than they were before you started.
Marcela De Vivo is an International Corporate Speaker for SEMrush, a Serial Entrepreneur, and Founder of Gryffin, a customizable productivity platform where teams can create a collaborative environment to work smarter, not harder. An industry veteran with nearly 20 years of digital marketing experience, Marcela is a dynamic speaker who attends industry events around the world to speak about SEO, data-driven marketing strategies, omnichannel workflow optimization, and the evolution of digital.