San Francisco, CA (PRWEB) April 11, 2013
Successful business owners offer a great service or product and superior customer service. However, great products and customer service won't help if financial planning is not in order. And gaining access to capital, such as a fast Micro loan from Sunovis Financial, will be made more difficult if the finances are in disarray.
So what should a business owner do to take control and what to avoid? Sunovis Financial offers some tips on what to avoid:
1. Poor Record Keeping and Administration
Small business owners are often not good record or bookkeepers! Many business owners had the great business concept, saw the need in the market and knew how to implement the idea. "They are not the type of personalities who jump out of bed in the morning and say “Great, it’s payroll tax and paperwork day today," says Terry Robinson, President of Sunovis Financial. "They are usually the type of personalities who think about their customers, big ideas or how to improve their product."
Tip 1 is that business owners cannot avoid bookkeeping! Sadly, too many small businesses fly by the seat of their pants and could have avoided problems by reviewing the business numbers. Businesses must know what money is coming in, where it is going and how much is going out, and have a good handle on inventory (if the business deals with inventory.) Either hire an in-house bookkeeper or engage one in your community to get control of your financial situation.
2. Not Watching Your Bank Balance
Tip 2 involves watching that bank balance. Many small business owners don't do this, and then rude surprises could occur such as bounced checks. That can affect the credit score, incur fees and even hurt your relations with suppliers who had to deal with insufficient funds. By having better bookkeeping, businesses will be able to better watch and manage the bank account situation. And come tax time, the task will be easier, too! Internet banking can be an easy way to check that account daily.
3. Poor Cash and Credit Management Practices
Tip 3 builds on Tip 1 and 2. Cash management practices to avoid financial ruin include:
a) Hold good insurance on your premises and inventory. Don't let a fire or flood take you down.
b) Those doing ‘business-to-business’ sales may be faced with having to sell on credit. If so then be disciplined in chasing up any outstanding payments. Don't be embarrassed about for what is due to you. Chase as hard as possible because the business has its own debts to pay!
c) Likewise, businesses that are granted a period of credit granted must pay on time.
d) Know the monthly expenses, and plan accordingly with incoming or anticipated revenues. Having a handle on that bookkeeping with do wonders.
4. No Cost Controls
No cost controls could spell disaster. Business owners need to compare prices and specifications. Have set limits on what the business will not pay, and always be on the lookout for a good deal.
5. Spending Without Forethought
Tip 5 addresses the need to consider every expenditure within the budget (see Tip 7) and financial situation. Early phases of a business require money for structure, inventory and start up but consider carefully each item. As the business grows, don't overreach but scale up thoughtfully. Consider the use of a short-term Micro loan if the business generates cash flow but could use an infusion of capital to go to the next step.
6. Depending On a Small Number of Customers
A business should never rest on its laurels. Marketing, promotion, product development and growing the client base are important for all businesses. Don't depend on a small number of clients. Don't be held hostage. Consider social media for some outreach.
7. Not Having a Budget
One good financial practice is to have a budget, which is Tip 7. A budget works well with the first tips above, to see the big financial picture and then plan into the future for it. A budget can also help business owners with Tip 5 before making any large or unnecessary purchases.
Financial problems can usually be avoided or mitigated by taking basic planning steps and then implementing them.
Sunovis Financial assists small business owners with SBA loans and non-bank Micro loans. The company mission is to rebuild the U.S. economy, one business and one loan at a time.