Managing & growing your business
Take care of your business and it will take care of you.
As your company grows, so do the complexities involved with running it. You're constantly finessing the ins and outs of cash flow, maintaining work volume and managing client expectations. Not to mention balancing business and personal life. You have a lot to deal with. Here are eight tips to help you keep it all moving forward.
1. It may be time to incorporate (if you haven't already).
If your business has increased, so have your financial risks. Incorporating protects you personally if things should get tough or you're sued. It also pays to insure what you're working to build. If you don't have business liability, key person, life or disability insurance, talk to your business advisor.
2. Examine your financial statements closely; monitor your cash flow.
Check your monthly statements line by line to spot red flags. If you're already online banking, it's easy to do via e-statements. You can view all your transactions in real time anywhere, anytime. Online banking also gives you greater speed and control over your finances. A business credit card will help you keep business expenses separate from personal, and allow you to provide corporate cards to key employees while still receiving a consolidated monthly statement.
3. Control costs, avoid shortfalls and increase profit margins.
Things can always be done better. Keep a handle on costs at all times to see where you can trim and where you'll have to make changes if cash flow should tighten. Monitor your receivables and stay on top of overdue payments. If you have suppliers, try to match your payment terms with theirs so cash comes in as payments go out. At the same time, see if there's a gap between what you're charging and what the market is prepared to pay. Or whether keeping prices steady will help increase volume and revenue.
4. Take on only what you can deliver.
Your business reputation is one of your most valuable assets. Accepting a contract you know you'll have trouble completing could potentially do more damage than good if you don't deliver as promised. Also, avoid moving beyond your core competency. Profitability is linked to doing what you do best. Consider outsourcing or - as difficult as it may be - declining a contract that exceeds your skill sets.
5. Polish up your credit rating.
6. Use debt to preserve working capital.
It's important to avoid using capital to pay up-front for long-term fixed assets, such as equipment. Your business advisor can help you determine whether leasing may be the better alternative. If buying makes sense, for example to purchase additional inventory, you may be better off using debt to finance these acquisitions.
7. Look for new sources of business.
Existing clients and suppliers are all excellent sources of referrals, so it's important to maintain good relationships with everyone you work with. Of course selling more to existing clients is an obvious way to increase revenues, so it's worth considering how you can do more for them. Is there a client segment or opportunity you can capitalize on? Is geography a factor? Do you need to expand your operation or open a new location? Pick from the low-hanging fruit before you start climbing the tree and incurring too many expenses.
8. Review - and revise - your business plan.
It's always good to go back and look at your original business goals. Are you on track? Do you need to revise them? Are you growing to the point where you need additional resources - human and capital? Look at staging your growth to manage timing of new hires and possibly avoid over-committing to new equipment purchases. Growth is good. Being realistic is smart.
Need expert advice?
Your BlueShore Financial business advisor is available to help you with any financial assistance you might need. Don't hesitate to call. Because when you're successful, so are we.