Strategies to improve your small business financial health
Overall strategies to improve your small business financial health are important to keep track of, especially because it can be easy to get caught up in the day-to-day.
Particularly with the rise of inflation, increasing costs, and other ever-changing financial factors, the big picture shouldn’t be cast to the wayside. Monitoring your financial health is beneficial for both staying afloat in times of duress as well as setting yourself up for long-term business success.
Here are a few strategies to help improve your small business’ financial health.
• Invest in growth and improvement
Keeping up with a dynamic economic environment as a small business requires you to constantly look for ways to improve and become more effective and efficient. This can present itself in a lot of ways — for example, new product development strategies, technological innovation, expanding your talent pool through hybrid or remote environments, and diversifying your marketing approach can all have a massive impact on your business even as costs of goods and services rise. Placing a heavy focus on both the internal and external vision of your brand ultimately will result in greater competitive advantage, even if sometimes upfront investments can seem like a big commitment.
• Don’t neglect your bookkeeping
Bookkeeping can feel like an arduous task, but this is the best way for you to keep on top of your expenses, revenue, net profit, taxes, assets, and so on. It also helps you make crucial management decisions for your business as you continue to progress financially. It’s easy to fall behind in these areas when you have to put out fires or deal with constant economic changes, so managing your books properly (and keeping up with them regularly) will save you a lot of headaches, time, and resources.
• Create a buffer for unexpected expenses
Typically referred to as an emergency fund, this is important for small businesses as much as it is for individuals. Things happen, and sometimes situations will arise that you did not see coming, whether that’s a recession, a dip in sales, a software failure, etc. Being underprepared for an emergency can leave you high and dry and can even mean the downfall of your business in some situations. Determine your budget, put aside what you can for the unexpected, and if you need to, cut costs where it is realistic and appropriate.
• Forecast your cash flow on a regular basis
When you can clearly see where your money is coming in and going out, you’ll create a better picture of your overall financial health. Forecasting your cash flow will not only help you analyze your current situation, but your historical patterns also will help you predict where you’re headed and whether you will need to secure additional funding, reassess your budget, or trim costs. If you neglect this step, you may find yourself in over your head if problems arise or you need to make a financial shift.
• Reach out for assistance
Consulting with a financial professional can be one of the best ways to take some weight off your shoulders and help you feel confident that your financial health is on the right track. Especially as your business continues to grow, enlisting the help of accountants and financial professionals will be critical in avoiding unnecessary mistakes and helping you build a future that is profitable, maintainable, and successful.
At Republic Bank, we have experts on staff who are committed to helping you with your banking, investing, loans, and all other financial needs. Reach out to us at (800) 526-9127.
• Republic Bank of Chicago is a Member FDIC and Equal Housing Lender. Michael Minetti is senior vice president and retail sales manager for Republic Bank.