Seven Money Tips to Manage Your Business When Money Is Tight

Money
You can loose sleep over money even on a good day…

But when you’re running a small business and the country’s economy takes a hit like ours has in the last couple of years, money problems can take you and your business under in a flash.

A few tips to consider on the financial side of your business when money is tight:

1. Remember cash is king. Before you decide to make a capital purchase for your company that will require debt, run the numbers and decide whether the purchase will put enough money in your pocket to allow you to pay off the debt required to buy it.  If the capital will not pay for itself within the amount of time it will take to pay off the debt, pass on it, at least for now.

2. Dust off your budget and follow it. Running a business without a solid budget is like trying to drive across the country as the crow flies.  A written budget will help you keep your company on course and intact.  Your budget should be fluid, refer to it and update it frequently.  For sure you’ll need to watch your expenses as your entity grows.  And don’t forget to prepare a budget for your personal expenditures.  You should keep track of your personal expenses and make sure you’re not draining your business to pay for excessive personal spending.

3. Re-structure your debt. Compare your debt, both long-term and short-term.  Do you have more short-term debt than long-term?  Is it possible to increase your long-term debt and pay off your short-term debt?  You might be able to increase your cash flow by stretching out the payments on your short-term debt over a longer period.  But, you may want to think twice before you take out a loan against a long-term assets like real estate.  In some cases, a loan like that amounts to taking money out of your life savings.  You should not take that kind of loan lightly.  If the need is a life and death issue for your company, that may be a good time to consider your options.

4.Schedule a professional review of your financial situation. One of the first experts or trusted advisors you should align yourself with when starting a business is a good business banker.  Schedule a full review of your finances with your banker.  You should be ready to provide current inventories, cash flows, and balance sheets during this meeting.  Of course, your banker may request additional information which you should provide to get the most out of the time spent with your banker. Having all the requested information at the ready will make your meeting effective and prevent you from wasting time.

5. Increase Your Insurance Policy Deductibles. Look at each of your business insurance policies. You might be able to increase your monthly cash flow by lowering your premiums if you can increase your deductibles on these policies.  Make sure you’re only insuring what you actually need to insure.  The best way to do this is to speak with a qualified insurance broker who writes for businesses.

6. Don’t be an ostrich. If you’re having financial problems with your business, grab those issues by the horns, don’t stick your head in the sand.  Be proactive, not reactive.  This is when to call on your trusted advisors, those people who you have developed strong relationships with who can advise you on the best way to handle these problems as they arise.

7. Be good to yourself. Small business owners have a tendency to submerge themselves in their work and never get away from it.  One of the best ways to keep your company and its issues in perspective is to give yourself a break. Take a couple of days off that have nothing to do with your work.  You’ll see the world and your business in a different light when you go back to work.  Balance is key.

These seven tips can help you look at your business in a different light, note where you stand, and provide a road map for solving any problems you’re faced with in your business.

Do you have any tips that you use in your business?