Most small businesses starting out get pretty excited when they see the cash coming in at the initial stages. Not nearly enough attention is paid to cash control as start-ups tend to have a limited understanding about the process of cash flow and what makes for growth for businesses. New business owners are too short sighted because they don’t have any experience in the world of business, as soon as the money starts rolling in, they think they have made it.
Whilst this viewpoint is obviously a naïve, it is understandable that young entrepreneurs and small business owners get excited at the prospect of earning money. They haven’t yet grasped though, one of the key concepts of building a successfully established organisation.
Saving money is far better than earning money. If a butcher for example saved £2000 a year on bills, how many steaks would he have to sell to earn that kind of money on top of his normal salary? Quite a lot is the answer! This concept works well in theory but in practice it is a little tricky, where do you trim the fat?
The average time spent per week on managing money and researching cost effective methods of running a business are as low as 4 hours a week. Many small businesses do much less than that. This is again where the business acumen compiled through years of experience comes in handy, a contact or two doesn’t hurt either!
Too many small businesses are overlooking the bulk buy opportunities made specifically to their niche. Imagine a B&B owner who went to a super market instead of a cash and carry?
Each business owner should know exactly what their business is worth and this is not just their net profit. You need to know how much your business is worth to other people and one of the best indicators of this is your credit rating. An incredible 54% of business owners have no idea of what their credit score is, make sure you are not one of them.
Once you find out your credit score you should be looking in to how you can improve it. Once improved, the money saving possibilities are endless. You could be paying a smaller amount of insurance, interest on credit cards and even business loans.
The next measure for making sure your business is running as economically as possible is looking at your utility bills. Other outgoings such as rent are usually non-negotiable unless you want to move every year but your energy bills are not of the same nature. You should always be on the lookout for a new deal. Online company Make It Cheaper are a free service and receive up to 3,000 business enquiries a week. Make the most of what they have to offer by giving them a call and explaining your situation. Make It Cheaper have helped save small businesses an average of £88 million in 2011 alone, could your business do with this kind of free financial advice?