By Nick Rojas
When you’re caught up with the day-to-day pressures of running a business you can lose track of the big picture. This often means unwelcome surprises – such as a year end budget review. You might discover that even if you made more profit you aren’t on track for next year’s goals because of mismanaged finances. Don’t lose out on the opportunities for growth – give your business a financial detox.
While it may seem complicated and time-consuming, the long-lasting effects of a detox for your business will be worth it. And the truth is, when done right it won’t be difficult, just informative and beneficial. Here are some steps for a financial detox:
Audit Your Budget
Before you can go through with the detox, you need to have a thorough understanding of your current allocation of funds. No one cut is going to magically change the face of your finances, but a few small changes can add up. For example, take a look at your incidental spending. Cutting company parties is likely to lower morale, so it shouldn’t be the first leap. But Is there a way you can combine special events to lower the cost? You can also better organize current spending on things such as office supplies. If every individual has their own yearly budget, you’re likely missing out on bulk deals.
Outline Next Year’s Goals
What is it you want to accomplish with a financial detox? Simply saying a better budget isn’t a real, tangible goal. Maybe you want to see the company hire a certain number of people, or reach a certain number of new clients. Being specific ensures you will be more motivated to make changes, and track your progress.
Negotiate with Vendors
If you have great relationships with your current vendors, use them! Explain the goals you just outlined and the growth you foresee the company having. If they can give you a discount or a special deal – that’s capital freed up for you to use that you might bring back once you need more of their services.
Review Payment Terms
Do you have a lot of customers from the past year you didn’t pay in full? How do your prices compare to your competitors? Review how you collect payments. If you aren’t already, you could require a deposit on bigger purchases to ensure something up front. If a lot of time is spent following up on missing payments, look for a way to streamline your system to make it easier for your customer and safer for you.
Seek Out a Line of Credit
Many people fear borrowing money- even if it’s for the good of their business. But the truth is, bigger projects like expansion or large-scale equipment repair is likely to cost more capital than you can afford to to spend up front. If you’re unsure what form of credit you might need, reach out to a professional. There are different types of loans for different situations and repayment plans.
You may not see evidence of the detox working right away. You could even be worried how cutbacks are affecting your employees or customers. This is where you need to be patient. If you decided to do a financial detox, you did so for a reason. Stay committed to your financial goals and the next time you audit your budget you’re likely to be surprised- this time in a good way.
Nick Rojas combines 20 years of experience working with and consulting for small to medium business and a passion for journalism to help readers grow. He writes about technology, marketing, and social media for the aspiring entrepreneur. When Nick is not sharing his expertise, he can be found spending time at the beach with his dog Presto. Twitter:@NickARojas.