Top eight financial advice to run your business smoothly

Running a business is never easy. It takes a combination of things—the right mix of staff, the right business plan, the right branding for your products or services, the right timing, and so on. Studies have shown that about 20% of small businesses fail in their first year and roughly 70% of them don’t make it past their tenth year.

Too often, small businesses fail because of lack of capital or funding. Some also fail because the owner had no vision or a business plan, had poor financial management skills, had an inefficient management team, had no marketing initiatives, and had failed to keep up with the times.

Today’s new breed of startups and entrepreneurs, however, are seeing more windows of opportunity in surviving when it comes to funding, thanks to the emergence of global crowd-funding platforms and access to more venture capitalists and angel investors.

But to run a business, it’s not enough to just secure your oft-needed capital. The goal is to make it grow. You must also be cognizant of the fact that it’s a competitive world. There are a lot of uncertainties. You fight for your survival.

So, what do you, as an entrepreneur, need to do?
First, learn how to use your capital wisely and make it work for your business. It helps to visualise your success but it’s a must to be honest with one’s self and face realities.

So, how can you sustain your business given the odds? Here are some experts’ financial advice.

Have a business plan – This is very important in determining your company’s success. Your business plan should detail how you will finance your company and its activities from how much money you will need, how many people you should employ, how much sales you should generate every month. It should also include your marketing strategies, your operational expenses, including rent and payroll.
Keep your books in order – Keeping tab on all your transactions. You or your accountant should be able to keep a good record of every sale, payroll and operations-related expenses. Profit and loss statements as well as balance sheets should always be ready for easy reference. This will also come handy when it’s time for auditing or complying with tax rules.
Keep creditors and suppliers’ accounts up-to-date – Keeping track of your creditors and suppliers’ accounts will help you create strategies on how to best deal with them, whether it’s for collections or payments.
Monitor your cash flow – To monitor the progress of your business, make it a habit to regularly check your bank balance, how much sales you’ve made, and your stock levels. It also helps to review your position against the targets set in your business plan on a monthly basis.
Know your daily expenses – If there isn’t enough cash to cover day-to-day operations, even the most profitable of companies would struggle. Make sure you’re informed of how much money comes in and how much expenses are made on a daily basis.
Ensure that customers pay you on time – Late payments can affect your entire finances, especially if delinquent accounts have already accumulated huge arrears for months. To avoid this problem, make your credit terms and conditions clear from the start. Make it a habit to issue clear and accurate invoices. Using a digital credit management system also helps.
Invest in growth – Growing your business should be one of your top priorities. Look for opportunities for expansion, including taking out a business loan, if necessary. But remember to set a limit to avoid draining your resources when it comes to payment.
Pay yourself – You’ve worked hard, you deserve to be rewarded. You can pay yourself with a regular salary as the company’s CEO or draw money—in cash or in kind—from your business profits on as needed basis. Either way, it’s a good way to give yourself an incentive.