According to the Small Business Administration, statistics reveal half of all employer institutions survive at least five years and only a third survive beyond ten years or more.
This is a far cry from the preceding notion 50 percent of businesses fail in their first year, but it is obvious starting a business comes with a complex array of challenges.
From hiring staff, to growing your customer base and tracking expenses, costs can soon mount up and many entrepreneurs find themselves struggling to stay within budget and manage company finances.
As as an independent contractor representing Colonial Life, I am a small business myself and I also get to talk to a lot of small businesses as part of the work that I do, so I know how tough it can be to make informed decisions that provide financial savings and improve the bottom line.
Here’s a shortlist of tips for entrepreneurs that may help.
KNOW YOUR OPTIONS
It's tough for smaller businesses to build credit and provide financial figures needed to secure business loans to aid growth. Make sure you're aware of all of the financing options out there, the pros and cons of each, if your business will qualify and how to apply.
Consult with a financial expert on how best to keep your books, as this will differ from business to business. For example; some companies will want to reduce tax liability, whereas others will want to make their income more appealing to lenders.
Money doesn't grow on trees, but there are a few other places you can find it
MANAGE MARKETING CHANNELS
We’ve all heard the saying, ‘it takes money to make money’, but not every business will be in the position to spend large sums on advertising, equipment and additional employees.
Many small businesses start with small marketing budgets and don’t always know how best to implement schemes to achieve a maximum ROI.
A great solution for small business owners is internet marketing. Utilizing online platforms and social media means you are able to compete in the same arena as larger companies, without having to spend a fortune on traditional marketing and PR tactics, which may not be right for your business yet.
TRACK CLIENT RETENTION
For a small business, every new client is important. As time passes you will start to build a solid customer base and will need to have a clearer overview of client relations.
One solution is to hire a customer relationship manager to keeps track of all customer related information and answer their questions.There are also plenty of digital CRM programs and software that can help you manage all facets of your company and create insightful reports to show how successful your business has become and if the goals and deadlines are met.
NEGOTIATE WHEN POSSIBLE
Costs for goods and service make up 28 percent of a small business’ budget. This is the second highest expenditure after payroll. Some costs can be perpetually lowered by negotiating discounts with companies you buy from.
Although businesses are often hesitant to ask suppliers for deals, many B2B companies expect customers to ask for lower rates. Creating some healthy competition amongst vendors is a good way to reduce costs. Often when a supplier knows you’re pursuing other options, they are more likely to offer the best possible deal.
Suppliers don't want to lose yo as a client, so most will negotiate on price
SET TARGETS AND KEEP TO THEM
Individual projections can affect the entire budget of your business if they are not met. For example, if you miss sales targets, you can disrupt cash flow and if your expenses are larger than expected in a certain area, you may drain working capital from paying bills.
To avert missed targets, run a monthly budget variance analysis to check you’re on track with your budget. This will allow you to implement immediate changes if you spot a serious problem.
INTRODUCE BENEFITS PLANS
Of course, every business owner wants their employees to feel valued. A good benefits scheme is also a major incentive for an employee to choose to work for you. Finding ways to save on benefit costs means you not only keep within budget constraints, but you also keep your staff happy as well.
Leveraging pre-tax and discounted tax savings for you and your employees through flexible benefit plans can help reduce your payroll taxes, increase your employees’ spendable income and ensure compliance with business provisions and regulations.
While small businesses don’t always have the deep pockets of bigger institutions, it doesn’t mean you can’t flourish or achieve the same level of success.
Being creative and capitalizing on more efficient technology and marketing channels can rapidly elevate you above competitors using obsolete methods. Careful decision making means reduced costs and driving larger profits while fostering sturdy foundations for the future.