5 Ways to Improve Your Business’ Finances
Do you know how many ways there are to improve your company’s finances? Either do I. There are too many to count.
You can work so hard that you don’t have a personal life. You can be the most frugal person on earth. You can, somehow, persuade salespeople and other employees to accept company-friendly commissions and salaries.
There’s just one problem with the above solution and many other solutions — they will only improve your company’s finances in the short term. My guess is that you are more interested in improving your company’s finances in the long term. If I’m right, you should take the advice of Josh Moody, the president of Top Credit Card Processors.
“You need to take one step back if you want to take two steps forward in business,” said Josh Moody. “Investing money, time and other resources is absolutely imperative if you want to improve your company’s finances in the long term.”
Here are five ways to improve your company’s finances in the long term:
- Invest In A Market Survey:
One of the problems that many small- and medium-sized businesses make is that they try to do too much. One business associate suggests that you begin selling a particular product because that’s what many of his friends want. Another business associate says she read an article that a specific kind of service is the future of your industry. One friend after another has a suggestion.
Is accepting this kind of advice wise? Often you won’t until you’ve invested time and money that you shouldn’t have invested. More importantly, your business might have been selling too many products and/or services in the first place. A market survey is a much better way to determine what will succeed in the marketplace than relying on anecdotes from business associates, friends, or even short-term sales. Investing a certain amount of money in a survey could spur an increase in revenues and profits that dwarfs what your company spent on the survey.
2. Focus On What You Do Best:
Were you around during the high-technology boom of the 1990s? For a while, it was such a high-growth industry that companies in other industries became involved in the high-tech industry. Many of these ventures failed because the high-tech newbies didn’t know what they were doing.
Focusing is what often separates the winners in business from the losers in business. Your focus should be twofold — producing or selling what the public wants and producing or selling products or services that you have expertise in producing or selling. The U.S. Small Business Administration (SBA) believes focusing on your “core strengths” is particularly important when the economy is bad.
3. Invest In People:
Paying employees as little as you can get away with sounds like an appealing way to improve your company’s finances. It is appealing — if those low-paid employees are very productive. The better strategy is to find the best, most productive people for each and every job. That sounds like a pain in the neck. It is, but it’s worth it.
“Too many companies are too slow to make personnel decisions,” claims Charles Warton, VP of Operations for Credit Card Processing Specialists. “Firing people is never easy, but unproductive employees often reduce their colleagues’ productivity. Hiring a productive employee can have a positive domino effect on the company.” It’s wise to hire productive independent contractors instead of employees if your company needs people at particular times rather than all year.
4. Explore A Loan:
Many small businesses need new equipment to manufacture a better product. Many other small businesses need a new office in a better location — or a larger office to accommodate the company’s growth. Saving money until you can afford to make the large investment sounds wise, but it can penny wise and pound foolish. In fact, you can lose a market opportunity by waiting.
Of course, spending money you don’t have is impossible. Consequently, you should explore a loan. The SBA has many programs for small businesses that want to expand. Some of them are listed on this website.
5. Explore A Joint Venture:
Cameron Kriss, president of Best Payroll Services said that small businesses can increase their revenues and profits by co-investing in a project with another business that they don’t have the wherewithal to invest in by themselves. For example, there might be a parcel of land in an area that is attractive to prospective home buyers, but the small business can’t afford to build homes on that parcel. The small business can instead persuade another company to help it buy the parcel or build the homes.
Joint ventures are an ideal way for two companies to improve their finances. The companies share the expenses on a project. They share the revenues as well, but the revenues would be zero without the joint venture.”
Will any of these strategies work? There are, of course, no guarantees but market surveys, focusing on the company’s best product or service, hiring new employees, loans, and joint ventures often do.