Gary Epstein, Managing Director at EasyBiz QuickBooks, shares his top three suggestions for SMEs to encourage business growth through better financial management decisions.
Be realistic with your options
Start by assessing just how much money you have available to allocate to the task of financial management, as well as how much time existing team members could realistically spend on day-to-day financial responsibilities like tracking value added tax (VAT), invoicing and reporting.
For example, for a start-up with a core team of less than five, it may be unrealistic for the team member managing sales and operations to also tackle financial management. Adding the expense of a full-time financial manager may also not be an option due to a limited staffing budget.
Plan, review and adapt
Remember that businesses go through lifecycle stages. While most start-ups will endure a period of negative cash flow, as the business becomes better established, the financial management process needs to evolve.
With this in mind, SMEs need to set reasonable goals and adjust these as the business matures. While the initial goal might have been to relocate to a bigger office in three years, for example, profits may be better invested elsewhere when the time comes. Keeping a close eye on cash flow patterns and forecasts play a major role in effectively reviewing organisational objectives and budget requirements or shortfalls.
Planning and budgeting for changing financial and operational needs which promote growth, like buying more stock or hiring more employees, also becomes more challenging if you don’t have the necessary resources or tools in place.
Invest in innovative software solutions
There is a wide range of online and desktop tools that can help businesses – of all sizes – manage their finances. When it comes to accounting software, select a package which addresses the current needs of your business. As your business grows, you will be able to invest in more comprehensive options. The basic tasks which should be included are invoicing, expense tracking and managing tax requirements.
There are also business budgeting and payroll software tools on the market which, for a low monthly cost, simplify time-consuming tasks. This gives SME owners more time to focus on other tasks that will help grow their business.
“With successful and efficient financial management being a key contributor to sustainable business growth, it’s lucky for SMEs that it’s never too late to take control of your finances and gain a deeper understanding of your business, where it has grown from and where it has the potential to go,” Epstein concludes.