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 extremely lead to cash flow problems that have serious short term consequences for the business.
There is nothing 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 absolutely 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 that 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 specifically designed to ensure that someone 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 largest 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 can mean significant savings. Growing companies build on a foundation of optimized cost control and profit margins.
3) Time for growth – Small business owners are burdened with lots of administration which can be time consuming and unproductive. Time is very much money in a small business environment as the more time spent on non-value adding tasks the less time can be spent on strategically driving the business for growth. Accounting software automates non value adding tasks such as year-end reporting means more time can be spent on growing the business.
Ultimately a small business needs 3 things to successfully grow 1) The desire to grow 2) Sound company financials 3) Time to plan and execute. In days gone by there experienced a significant cost to structured financial management via high accountancy fees. Today for as little as £ 100 a business can get a value adding too that enables them to get closer to their financials, manage incomings and outgoings and save time on non-value adding year end reports.
All businesses looking to grow should give real thought and consideration to buying a value adding accounting software package. There are many products available that cater for businesses of all shapes and sizes so it’s important that research is done before any purchase is made. There are tools available to compare product across the market quickly and easily. Do not let the sombre mood of the current economic climate detract you from taking control, managing the financial health of your business and striving for growth.