Business Finances, From Zero To Hero
Running a small business can be highly challenging because you don't benefit from the expertise that corporates hire in their teams. When you are a solo entrepreneur or own a business with 10 or fewer employees, you can't justify recruiting finance experts. Instead, most small businesses work within their budget and needs and choose to:
Use an accounting tool to manage invoices and taxes
Contact a contractor for weekly or monthly accounting tasks
Outsource to an accountant for tax preparation
Do it themselves
As a result, small businesses are not only prone to accounting mishaps, but their choices also eliminate financial growth opportunities. Miscalculations, lack of understanding, failure to gain an overview of the big picture, and lack of guidance can dramatically affect financial stability.
If SMEs want to unlock their full potential, they need to focus on financial strategy improvement. Account keeping and tax paying fall short of a strategy, but using professionals like Legendary Capital as inspiration can help.. Here are 4 decisions that belong in every financial strategy.
#1. Outsource your financial process, not just accounting
Bookkeeping is only one element of your business finances. At a small business level, many entrepreneurs wrongly assume that accounting and finance are synonymous. In reality, accounting is the process of tracking what comes in and out.
On the other hand, finance as a whole can be used to inform and achieve strategic business goals. By outsourcing with a finance expert, small businesses can balance their vision with realistic goals, determine profitability, manage risks, manage assets, and improve their business strategy.
#2. Implement finance fraud protection
According to experts, businesses lose, on average, 5% of their gross revenues every year to fraud. While large companies can sustain the loss, the consequences can be more serious for small businesses. Besides, small businesses are often an easy target for fraudsters because they lack additional security. So, ensuring the business takes every possible step to minimize fraud can be a game-changer.
#3. Design an investment strategy
A finance planner can provide guidance on the best investment portfolio for a small business. Repurposing some of your revenues into an investment strategy can support growth and drive a passive source of income. Some of the most popular choices for business investments include stock purchases, focusing mostly on commodities and technology, real estate purchases for rental purposes, and investing in cryptocurrency.
#4. Make it easier for customers to pay you
It is not uncommon for small businesses to limit themselves to a couple of payment methods, typically card payments and cash in-store or card payments and Paypal online. In reality, businesses are more likely to attract a broader range of customers if they can diversify their payment methods. Some of the most popular payment methods nowadays include:
Credit card payment
Debit card payment
Paypal
Apple Pay
Bank transfer
Bitcoin
Checks
Mobile payments
Buy now, pay later
Cash in store / Cash on delivery
Prepaid card
Postpay
Deferred debit card
It is worth researching which methods are used by your target audience.
Skillful financial management can be crucial to the growth of small businesses. Many ventures fail to expand because they lack financial understanding. In other words, it's time to move away from accounting only and embrace the full diversity of business finances to assess your presence in the market.