Carrying a budget of entry and exit of money are points that you should consider, according to chegg; they warn that many companies that start doing well forget to plan.
When talking about economic issues, one of the main problems in small businesses is financial planning because "they generally do not know how to adequately manage their resources and prepare to have an emergency fund in bad times.
It happens with many companies, when it starts to go well they forget to plan and lose sight of the risks they may suffer, especially in times like this that the economy is so volatile.
"The cost of a consultancy , for example an independent accountant to the business can represent around 10% of the total expenses of the company", which is not much if one considers the results that this decision may represent in the future.
When creating the management strategy for your business, it is important to think about issues such as the recession. That does not mean living thinking that the company can close from one day to another, but to become aware of the bad 'gusts' that can arise and how to avoid it. Here, some recommendations to make good use of your resources.
You should always have a budget of income and expenses (outflows) of your business, which will guide you to make financial decisions, especially if you received some credit for your business. Hold on to this planning by updating it according to your needs and the economic moment you are going through.
Interest, inflation and exchange rate are indicators that will help you to clearly project how your money is moving, just one example: prices and the cost of raw materials are modified just by interest. In the company, there must be a person in charge of consulting these indicators and making projections in the media and on a bank page.
To keep the accounts clear you have to know "where the shoe squeezes your business to improve.
A good method to have more knowledge about how to manage money better is to analyze some information about the sector in which you operate. Find out how much sales decreased in your activity in other times of crisis? Which months were the worst? Does your sector go into recession before, at the same time, or after the national economy?
Keep a daily record of your income and expenses. This flow of inputs and outputs is the basis for creating your management strategy. It allows you to plan your payments and, in turn, define your balance that is, what debts are in the immediate and how much capital you have to settle them. This is a good "thermometer" to know what kind of financing you can request for your company.
Respect in its entirety the deadline set to cover your financial commitments, such as credit cards or loans received. However, not because you get a "good run" you have to spend more than indicated. "Sometimes the entrepreneur registers an increase in his profits.
Another option to cover your payment obligations or leave an emergency is to maintain an open line with a bank, but this should be requested only when you have considered your growth capacity and based on the alternatives that the bank offers to restructure the debt in installments.
The interviewees agree in which the cheapest financing is internal, that is, as a company you must generate enough profits and reinvest them to grow.
However, there are other ideas you can consider to multiply your resources, as long as you have made an assessment of what it means to start growing your business with a loan:
If it is a high-tech company you can resort to venture capital or angel investors.
If you lean towards a bank loan, consider that if you already have financing it was through this route, the institution requests to cover in full the first loan.
If you have had a loan with a microfinance company, there is an alternative to return with them, guaranteeing that the new line of business represents good returns.