Many small businesses fail to grow due to the lack of a solid foundation. This article explains how the introduction of structured financial management can help small businesses optimize their business and strive for growth. Growth can actually be a fatal for a business that does not have a solid financial footing. The process of selling more and actually collecting the increased revenue can put a real strain on a small business if not planned effectively. The extra investment and capacity management can ultimately lead to cash flow problems that have serious short term consequences for the business.
There isn’t anything more important in a small business than having a healthy balance sheet and a sustainable cash flow. It is the foundation to which all else is build. It is impossible to grow a business and expand inventories and equipment without stable company commercials. Yet worrying numbers of small businesses go through life wholly under-prepared when it comes to the discipline of financial management. There are many examples of sole traders, contractors and tradesman running their businesses without any real knowledge of sustainable financial management. This lack of knowledge ultimately leads to their business not growing at a rate that their skills/product is capable of.
In the current environment there are no reasons why any small business owner should lack the knowledge and skills they need to successfully run the financial performance of their business. The emergence of accounting software has made it possible for even completely financially illiterate owners to run their financials as soundly as seasoned accountants. There exists a range of accounting software products that cater for all manner of businesses all offering the same benefits –
1) Easy to use and understand tools to manage the company’s financial performance – Accounting software is specially designed to ensure that somebody with no knowledge of financial accounting can successfully manage the company financials. Bringing businesses owners closer to the financial health of their business is the biggest advantage of this technology. The software easily allows business owner to see the detailed financial performance of the business and use to make sound business decisions for the company. This ability to understand the current performance and forecast the future is a critical part of the planning required for growth.
2) Lowering operating costs – suitable accounting software package can often help reduce a business reduce its operating costs. The most direct saving comes on the form of accountant fee savings. Accounting software allows businesses to successfully submit their own year-end reports rather than submitting with an accountant. Also, accounting software enables small businesses to get increased transparency between their supplier costs. Consolidating suppliers or renegotiating rates costs on the back of this information can mean significant savings. Growing companies build on a foundation of optimised cost control and profit margins.