Managing a successful small business in this difficult economy is no small accomplishment, but the good news is that even now there are a lot of companies that are poised to take things to the next step and expand their offerings. Financial management is the key to making this change successfully, but that’s a fairly broad term that encompasses many different aspects.
Financial management tasks involve tracking, controlling, and using financial resources as effectively as possible to minimize the risks involved with growing the business. The most common tasks include accounting, financial reporting, budgeting, collecting accounts receivable, risk management, and insurance. While it’s often possible to do these things on your own as a small business, things will get a lot more complex as you start to grow.
Many managers will make the mistake of attempting complete spend management control over every aspect of the growing business. As the company expands into new areas, though, this just isn’t feasible. Many entrepreneurs have burned out trying to do it all on their own. There may be some software tools out there that can help someone handle many of these tasks, but sooner or later your time will become too valuable to spend on bookkeeping.
Money Management and Financing
You shouldn’t try to just “get by” when it comes to managing the finances of a growing business. You need to set up an accounting system that can cover a wide range of jobs. This means having measures in place to collect on bills, pay employees and set up their benefits, compensate suppliers, and pay your taxes. All of this has to be done on time and on a regular basis.
In order to manage the company’s finances, you have to try and see the big picture. You have to know how the money is flowing through your business and how your assets and liabilities are affecting the company. At the same time you have to keep track of the small details – the everyday expenditures and income that support the big picture.
Once you’ve gathered this kind of information, you will be better prepared to start growing the business in effective ways. You will know what options are available for financing major purchases and backing new projects. You can decide whether asset-backed financing is a good idea, or if it would be better to look into different leasing options.
Financial management is an ongoing process, but in order to be really effective you need to continually plan ahead. This kind of financial planning requires that you identify the resources you have available to you as well as those that are necessary to achieve your goals. As a growing company you will also have to develop relevant and realistic budgets, so as you continue planning and forecasting your future endeavors you can minimize the risks and remain successful.
Once you’ve taken the first step toward growing your small business into something much larger with a wider reach, careful financial management will help you continue to be profitable. You may have been able to do a lot of these tasks on your own while the business was still small, but now it may be time to work with someone who has been specifically trained to see the big picture and make the most of the small details.