How to Make Smart Financial Decisions for Your Growing Business
At any stage of your business, financial decisions are one of the most difficult aspects of business ownership. However, once your company begins to take off, you’ll be faced with making some tough calls that can seriously impact the health of your growing business. While it can be easy to get caught up in daily costs and details, it’s also important to keep the big picture in mind.
If this sounds like a lot to navigate, it is. But you’re not on your own. Below are a few of our top tips for how to make smart financial decisions for your growing business.
Stay up-to-date on your finances
As a business owner, it can be difficult to divide your attention adequately to all of the demands of your company. However, finances should always be a priority. While it might seem like enough to know whether you’re in the red or green, that usually isn’t sufficient to make informed financial decisions.
Before making any major commitments, whether it be equipping your new office with supplies, purchasing inventory, hiring new employees, or putting new systems in place, you should ensure that you’re reviewing current, detailed financials for your business. Keep in mind that every addition to your overhead takes away from your profits. Make sure everything you’re investing in is going to add value to your company.
Doing a cost-benefit analysis before making purchases or investments can greatly benefit you in the long run.
Review pricing before making decisions
While it might be tempting to make your decisions based on convenience, after all, you are very busy, it will work to your advantage if you can take your time and review pricing for multiple options. When reviewing alternatives, you should also consider the features of each offer. If one is bare-bones and doesn’t have exactly what you need, but is affordable, that might not be the right choice. However, if you can find something that meets both your cost and needs, that’s an easy choice.
For example, say you’re running a courier business. When you’re looking into GPS fleet tracking pricing, you don’t want to just with go with the cheapest option, you want to evaluate the quality of the service you’re purchasing. Similarly, if you’re hiring an event planning agency to prepare your grand opening, you want to compare the scope of their services with their event organizing fees.
Of course, you always want to keep your budget limitations at the forefront of your decisions, but that doesn’t mean you can’t find high-quality solutions that improve your business operations.
Scale your growth to your financial means
It might be hard to handle all the demands of your rapidly expanding business, but that doesn’t mean you should immediately start hiring help. Unfortunately, hiring new employees is one of the biggest expenses companies take on. So, you need to be very careful about growing your team too quickly.
You should also consider what position will benefit your company the most at this stage. Is it a personal assistant to help you with the more mundane tasks so you can focus on your business’s vitals, or maybe you need to hire a sales associate to hold down the fort at your storefront part-time. You might also opt to hire a bookkeeper to help keep your finances in order if that is a major source of stress. Whatever you decide, the bandwidth of your cash flow should always be top of mind.
If you review your finances and find that you can take on a new employee or two, make sure you take the time to find the right employees to suit the job and your company culture. Employee turnover can be a big hit to your bottom line.
Find a financial advisor
If your business is at a crossroads where managing and planning your finances is becoming too complex, you might consider enlisting the help of a financial advisor. Consulting a financial advisor might seem intimidating (and expensive), but it can actually help save your business from serious financial faux pas. They can help you set goals for each quarter, decide how to move forward with big investments, and strategize how to make your business profitable as quickly as possible. And, this is just a shortlist of how they can help move your business forward.
One of the biggest mistakes new entrepreneurs make is not focusing on the financial side of their business. But that doesn’t have to be the story for your company. Starting with these tips, you can ensure that your growing business remains on the pathway to success.