Let’s face it. Small business is challenging. You have goals and a great vision for success. But there is so much to do! You have people challenges, competitive challenges, service challenges, and financial challenges. Don’t despair and don’t try to do it all alone. As General George S. Patton said, “Accept the challenges so that you can feel the exhilaration of victory.” An anonymous author also said, “Challenges are what makes life interesting. Overcoming them is what makes them meaningful.”
9 Financial Challenges and How to Overcome Them
First, it is important to recognize what your financial challenges are. Then, you need to create a plan, develop an effective process and do the necessary work. As well, it is important to stay consistent with your planful actions, keeping your resolve to improve and grow.
Having an inadequate cash flow and managing cash well are frequently described as the most critical challenges for business owners. Without enough cash, you can’t pay expenses, handle payroll and even pay your facility rent. So, it is critical to forecast revenues and carefully manage expenses to conserve and time use of cash. You can:
- Work to speed-up accounts receivable payments
- Extend expense payments when possible
Goal Setting and Budgeting
Define your financial and other goals and associated goals with firm budgeting. Stick to solid budgets and watch expenses carefully.
Manage Capital Needs
You clearly need cash to run your business, but to grow your business, you will need capital to invest. Thus, you will need to manage your business credit and develop relationships to provide the necessary growth capital.
Control Costs and Manage Overhead
Look at expenses carefully. Don’t over-order inventories and avoid any unnecessary ‘bells and whistles.’
Don’t overlook or fail to consider unanticipated expenses. Program some “emergency funds” into your budget to protect your cash flow and prevent unhappy surprises.
Improve Customer On-Time Payments
- Collect revenues more quickly, using on-line payments, for example.
- Overcome late payments with better reminders and on-time payment incentives.
Marketing activities and expenses should be well-defined and measured to drive results.
The financial challenges for revenues require strategy, business structure, process and people. Your organization simply must focus on revenue growth.
Profitable Customers and Client Dependence
You want to find and retain profitable customers and then, using data, find many more just like them; not depending on a small and static client base.