While growth is good for any business, many owners find that it can quickly eat away at reserves and revenue if you’re not prepared. Staying on top of business finances is no simple feat, but with the proper preparation and tools, it can be done. These are five suggestions for creating and maintaining a financially sound business in today’s world.
Keep All Accounts with One Bank
As your business climbs the ladder of success, you’ll find yourself moving money around more frequently from account to account. Keep all accounts under one financial institution if possible for easier tracking and quicker transactions. You’ll also save a small bit of money from not paying fees on transfers outside of the bank.
Expect and Plan for Shortfalls
Many businesses make the mistake of operating without preparation for shortfalls or mishaps, but the truth is that virtually every business experiences them. Expect supply issues, losses, and even staffing problems. If you make the proper preparations, your business will take much less of a hit. Essentially, you should always be ready for a catastrophe.
Match Your Accounting System to Your Growth
The accounting system your business started out with in the beginning simply might not be appropriate if growth has taken place. Larger businesses require more complex accounting systems, and the professionals they hire to handle their finances must be extremely seasoned in commercial finances. When your business scales, ensure that your accounting does as well.
Always Know Exactly Where Your Business Stands
Simply put, don’t hire another person if it merely seems as though your revenue could support it. Don’t operate off of intuition or gut feelings when making decisions for your business. Take a look at the numbers on paper and intelligently calculate whether or not it would be a sound move. When expanding and making decisions for your business, you must be as in tune with reality as possible. If you fall short when the numbers have ultimately been crunched, consider getting help from investors who want to see your business grow.
Benchmark Your Financial Performance
To get an idea of how your business is faring in comparison to others in your field, benchmark your financial progress with theirs. If you notice major differences from the norm, find out what it is that you’re doing differently. You should strive to at least compete similarly or better on a financial level to other businesses in your sector. You might even consider taking out a business loan from PenFinancial Credit Union to make sure you have enough capital to invest in products and employees. Having a great foundation to build from should be paramount for any business’ success.
Following these suggestions will certainly help your business start out and progress on the right track. A good startup always has a hand in their own destiny and you can never be too careful when it comes to your company’s finances.