If you’ve been thinking of starting a business, one of the areas that might have been giving you a headache is how to ensure your finances are flawless. We all know that proper management of business finances is the best way to create a solid financial future in which any startup is highly unlikely to fail. Luckily, I have three amazing financial tips that you should keep in mind while starting your business to increase your chances of business success.
Create a sound billing strategy
When you start your business, you need to be prepared to have one or more clients who are always late on their invoices and payments. Proper financial management involves proper management of cash flow to ensure the business is operating at a healthy level each day. You don’t want to struggle to collect from your clients; that’s why you need to have a good billing strategy.
The first thing you need to do is set clear terms. Let your clients understand them beforehand to avoid surprises, and increase your chances of receiving your payments on time.
Secondly, try to optimize the billing times. You don’t have to invoice when you reach the conventional invoicing milestones. Instead, you can send invoices on weekends if you’re planning on invoicing weekly. If you plan to invoice monthly, begin sending the invoices on the first day of the month.
Generally, the invoices that are sent on weekends tend to get paid within 29 days. That’s 10 days quicker than those sent on Tuesdays and Fridays. Similarly, the invoices sent on the first day of every month tend to be paid within 30 days. Conversely, invoices sent on the 30th day are often paid within 38 days.
Finally, automate your billing process, as simple automation features usually make payments faster. For instance, you can set up recurring billing schedules to charge recurring fees automatically.
Do not be afraid of loans
Although business loans are generally scary, successful business owners often see them as powerful tools to fund and grow their businesses. As a new business owner, you should not be afraid of loans, as a business loan can help you maintain your business operations, expand your space, invest in better equipment, or even help you get more employees.
One of the simplest ways of gaining significant cash flow is taking out a business loan. If you are at a stage where you’re ready to launch your business, the influx can benefit you massively. Later on, another loan can assist you to maintain full control of your business operations without having to issue shares. Actually, Forbes confirms the fact that debt financing is the best way to go if you want to maintain control and ownership.
There are many creditors who are willing to offer you a loan whether or not you’ve filed for bankruptcy. For instance, VA Home Loans can offer you a VA loan after bankruptcy without requiring a predetermined credit score.
Just remember to have an effective strategy to manage your debts before accepting any loan. Always prioritize paying off outstanding business payments swiftly, and avoid carrying over debts to the subsequent financial year.
Invest in growth
As long as your business is alive, always look into growth opportunities to allow your business to expand and thrive. As a business owner, you can dedicate your time and energy to seeking out opportunities to expand your company’s presence in its existing market, and maximizing your current customers before focusing on expanding into new markets and getting new customers.
On top of that, you can look for ways to sell more to your existing customers and grow your share of your current market to grow. Developing new products or services, or revamping all your products that are not selling as fast as you want to succeed in a saturated market and beat your competition can be another great move.
Last but not least, create solid partnerships with other small businesses to provide leverage to each other. In other words, do whatever it takes to grow as long as your business is running.
Starting a business is not easy. However, with these critical financial tips, you can establish a healthy financial management system, and guarantee yourself a successful business journey.