Running a business a tedious and demanding way of earning one’s livelihood. The sheer amount of meticulous planning and mental preparation to fail can get the heart pounding heavily. Businesses, despite the tremendous pressure, not only thrive, but also flourish, expand and become the reason so many people in the world find employment. Keeping your boat afloat requires a solid base and a strong captain at the helm who takes all the decisions with an equally strong mind. This strong base for business is finance. A businessman who knows how to handle his money seldom finds himself in trouble.
Let’s go through some key strategies experienced businessmen implement to make sure they keep financial stress either at bay or at minimum at least
- Getting Cash Flow Regulated
Billings, records, invoicing and payments(both inflow and outflow) work best when there is a systematic flow chart ready and implemented in place. Your associates as well as employees this way can expect when to receive their salaries. Your clients/credit customers can also make arrangements accordingly when they know the date to clear all the dues. One of the most common reasons for people running into financial trouble is unregulated and erratic money flow cycles. Get out of business with people who are neither providing any good business nor making payments systematically.
Get an Accounting System/Accountant in Place
Accountants are trained and qualified to handle the matters of money properly. If your business scope is large, and you find it too tedious to handle it alone, hiring an accountant will help a lot. The accountant will find out all the loopholes which are sucking a business dry and once the holes are plugged, the coffers begging filling up again. An accounting system/ERP system does the job of an accountant while requiring lesser manual intervention.
- Start Making Forecasts
Knowing the direction in which the wind is blowing is a very important attribute of a smart entrepreneur. Keeping a close eye on the economic conditions, changing supply/demand equations, billing gaps etc. are important parameters to be able to make an informed forecast of the upcoming situation.
Let us take the example of a desert cooler. Supply and demand is very different in the summer as compared to winter. Traders invest more money into buying high-quality stock for the same right from January to make good sales around April-May when the summer is at its highest intensity. The same kind of attention goes away come October and when the mercury begins to drop.
Similarly, predicting when the demand for your product/service may drop in the upcoming time will go a long way into making life easier during stressful times.
Start Focussing on Retaining/Gaining Customers
Customers are the backbone of every business. A business cannot run without customers. Your customer can be an individual, end-user, or even another business. In any case, losing a customer almost certainly means bad publicity. It is very easy to get bad reviews, difficult to get good ones, and extremely rare to get excellent ones. One retained customer is half-the-win over the financial stress. Regular customers also mean regular payments, which can help you tread through dangerous waters with lesser problems.
- Liquidate Assets
This one is very tricky and must always be adopted only as a last resort. There are times when business slows down despite you doing everything you can to keep it running. This is the time when your appreciating asset investment would come to the rescue. When the times are good and you have surplus finances, use them to either reinvest in your business to make it better and bigger, or try to get an asset in the name of your business.
E.g. Surplus money from a well-doing shop can be used to purchase another shop/land in another area. You may open another shop there or simply use it for rental income.
This shop that you, or rather your business now owns will come in handy should everything still go haywire. Assets can be in multiple forms, not just land.
In a Nutshell
The COVID-19 pandemic brought about a huge catastrophe upon the world. Shops were closed, service-based businesses took a huge hit, manufacturers had to shut down their facilities for a long time. And as a result, all this resulted in a huge dip in the economic condition of the world. Millions and millions of businessmen found their livelihood in grave danger of being, wiped out courtesy of an infectious disease. Entrepreneurs with acumen and planning were able to get through it with relative ease. Businesses are now getting back on track and picking up pace once again. This is the perfect time to start planning and making your forecasts about the next few months.
Remember, a businessman who handles money systematically keeps a track of all income/expenditure and gives thought to keep emergency funds rarely finds himself facing financial stress even in the worst of times.
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