If you’re frustrated that your business seems to be doing well but your profits aren’t matching your expectations, you might be leaking money in areas due to your policies, procedures, purchasing and other factors. Taking a look at how you manage your finances can pinpoint unnecessary spending that is hurting your bottom line.
Internal Controls: Since cash is the most liquid of all assets, a business cannot survive and prosper if it does not have adequate control over its cash. Cash is the asset that has the greatest chance of going missing and this is why you must ensure that you have strong internal controls built around the cash process.
Reconciliation: To ensure business growth, you will need to see what goes out and what comes in each month. By reconciling your accounts on a monthly basis, you are able to do just that. Viewing each transaction, whether a debit or credit, allows you to spot opportunities. Are you struggling with trusting an employee to handle your monthly reconciliation? You should be!
Budgeting: A business that doesn’t budget sets itself up for a host of financial problems down the road. This is true for businesses of all ages and sizes. Conversely, a business that develops a detailed business plan can create a road map for financial success and opportunities to expand.
Pricing: Small business owners can ensure profitability and longevity by paying close attention to their pricing strategy. Having the lowest price is not a strong position for small business. It invites customers to see your product or service as a commodity and obscures any added-value you offer.
Competitive Bids: If you’ve been using the same vendors for several years, seek competitive bids to make sure you are paying market rate. Contact several insurance companies and compare coverage and rates. Check out new suppliers who might offer free shipping, better terms or lower prices to get your business.
Shrinkage: Inventory loss is a big problem for any business that carries physical goods. Without controls and monitors in place, there is no way to trace the root causes that created the shrinkage in your business. It is estimated that companies lose 6% of their total annual revenue due to employee fraud and abuse.
It’s hard to deny that keeping all your books in order is a complex process. That’s why hiring a professional to help you is one of the best investments that you can make by saving you thousands of dollars each year.