7 Ways to Give Your Small Business a Money Makeover
Every small business, even the most successful, can benefit from a money makeover from time to time. Some of the best changes are those that are operations-based because they can help you improve your business finances on a larger, more sustainable, scale. The following seven tips may take a little time to execute, but they are fairly painless, and will help you create lasting change in your small business finances.
1. Modify Your Accounts Receivable Process
A key to ensuring adequate cash flow is timely invoicing and collecting payments. If you invoice your customers on a loose and sporadic schedule, you will get paid on a loose and sporadic schedule. Create a standard billing policy, that includes clear payment terms, and outlines the process you will take to collect on unpaid bills, then follow through. And don't be afraid to reach out to your customers personally to inquire about payments. Sometimes a personal touch is all you need to make sure payments are sent on time.
2. Get Rid of Obsolete or Zero Usage Inventory
Unused or outdated inventory doesn't only take up space, but it also wastes money. Conduct an inventory analysis a few times a year to see what you have stored that you don't anticipate selling or using in the next 12 months. All of your inventory that is in good working order can be sold at a discount, or even back to the vendor, giving your business a quick bottom line boost.
3. Go Green
Making your business more environmentally friendly shouldn't be just a PR tactic or something you think about once a year, but also a way to improve your finances over the long term. And it's simple to do. Turn off equipment at the end of the day, use energy efficient lighting, recycle and reuse products to cut costs. You may even want to consider going paperless in your small business to reduce costs and streamline your operations. This is especially effective when sending and receiving invoices.
4. Buy Used or Lease Instead
Buying new equipment is great if you're flush with cash, but most small business owners aren't. Consider leasing what you need instead of buying and using valuable cash. Leasing also gives you an opportunity to upgrade your equipment at less cost, and it frees up working capital you need in the day-to-day operations of your business. This is really good tactic when it comes to office equipment and computers because the technology is improved often.
5. Replace Your Landline With VoIP
Voice over Internet Protocol (VoIP) phone systems are low cost, portable, and flexible, making it a great option for small business owners who don't need an extensive telephone system. Many VoIP providers have features that provide a seamless transition from landline to VoIP, including the ability to port your existing phone number, multiple extensions, fax functionality, call forwarding capability, and email or text notification when you receive new messages.
6. Negotiate Your Credit Card Processing Fees
Credit card companies are notorious for chipping away at business revenue. Shop around for competitive rates before you agree to specific processing fees. If you are already working with a provider, negotiate your rates by providing them with details on what their competitors are charging. This can be a quick way to lower the fees your business has to pay every time you accept a credit card payment.
7. Get Friendly With Your Cash Flow
Cash flow is the process of money moving in and out of your business. This happens daily, although you may not put much thought into it unless it's time to close out the month or review your files with your accountant during tax season. At a minimum, you should know at the end of every day what you are owed and what you have to pay in the coming weeks. Having this kind of visibility into your business finances can help you prepare for and be able to quickly adjust to unexpected situations that may cost money you didn't plan on spending.
Pick one or two of these methods to give your small business a money makeover that will make your business more efficient and profitable over the long term. For more ideas on how you can improve your small business finances, review these simple money management practices that can help you form better financial habits on a daily basis.