In any business, there are two important functions to monitor: cost control and cash flow. A healthy business is a balance of both. While there are infinite factors that contribute to each of these functions, there are a few simple steps you can take to start making a difference for your business right away. Let’s explore some of them.
How to Control Costs in Your Growing Business
No matter how profitable your business is, if you’re spending more than you’re making, you’re going to have problems. Luckily, some small changes can go a long way toward cutting down costs and bringing your business to a state of profitability.
Office buildings require a lot of energy. Taking simple steps like installing motion activated lights, lowering the heat at night, and encouraging staff to power down their computers over the weekend are all great ways you can optimize your energy efficiency.
Hire Seasonal Help
If your business has a slow season, there’s no reason to keep a full staff year-round. Working seasonally works well for college students who are home on school breaks or for teachers who don’t teach over the summer. So, depending on your business, this approach could be beneficial for both parties.
Assess Supply Costs
Some businesses can save money by purchasing supplies in bulk or purchasing raw materials rather than premade items. For example, a restaurant can purchase frozen appetizers, but it’s often more cost-effective for restaurants to purchase a few raw ingredients that can be prepared in house. Plus, this approach gives you the opportunity to create a signature recipe that customers can’t get anywhere else.
Be Smart with Your Advertising Dollars
The more you can measure the success of your advertising, the better. For many growing businesses, this means digital marketing is a good way to go because you can target a specific audience and see exactly how they’re interacting with your brand. From there, you can set clear goals, track your digital marketing efforts, find out exactly how well they’re working, and adjust accordingly. This strategy makes it easy to get the most out of your advertising.
Use Time Wisely
Time is money! In any work environment, it’s important to prioritize projects, keep meetings small, and keep track of how much time is being spent on projects. While of course it’s impossible to track the productivity of every minute, developing some good habits can increase efficiency in the long term.
How to Maintain Cash Flow for Your Growing Business
Of course the goal of any business is to maintain steady cash flow so that you can cover all your daily expenses, pay your employees, and make a profit. Plan for the unexpected, set realistic goals, track the success of your endeavors, and make it easy for customers to pay. It can seem like a balancing act, but if you conduct regular checkups on a handful of key factors, you’ll be well on your way towards a sustainable business.
Be Realistic with Business Goals
Many growing businesses don’t break even for the first few years—do your research and know what to expect. Once you’ve examined your projections, you can determine a figure for your business loan. It’s also important to manage your expectations for growth. Growing too fast can hurt cash flow, but growing too slowly reduces your opportunities for increased profit.
Maintain a Contingency Fund
Life is never perfect. Expect some things to go wrong and set money aside to float your business through the tough times. It’s also important for your business to have access to a line of credit, so you can have instant access to short-term financing for any unexpected expenses.
Cut Down on Fraud
Of course nobody wants to think that they could become victims of fraud. It’s important to take as many precautions as possible to keep your money and your business safe. Recently, there has been an increase in thieves raiding mailboxes and taking checks that have been sent through the US Mail. After the checks are stolen, the criminals alter the checks and then attempt to have them cashed. One fraud prevention step you can take is to use ACH (Automated Clearing House) payments when paying vendors instead of writing checks. Your payments are then sent electronically and will prevent any checks from being stolen.
Track and Analyze Your Finances
Many point-of-sale (POS) systems capture data that can be useful for planning and assessing your finances—you can track busy times of day to make sure you’re staffing properly. Most POS systems will also measure your inventory to make sure you’re moving inventory at a sustainable rate. Part of analyzing your finances is to determine which services are most profitable and focus on promoting those.
Accept Credit Card Payments
In most parts of the country, people expect to make payments with plastic. Credit card payments make next-day funds available to keep your cash flow moving. Explore merchant services such as Chip Card/EMV terminals available to your business.
By controlling costs and monitoring cash flow, you can keep your business on the path to success. Union Community Bank offers a number of tools to assist with cash flow, from lines of credit to ACH direct deposits, let us help you with all the pieces you need to maintain a healthy and growing business.