Small businesses form the backbone of any country. No matter how much we all love large, multinational corporations, small businesses are what truly make a difference. In 2018, the U.S. Small Business Administration Office of Advocacy’s profile said that these businesses made up nearly 44% of all economic activity in the country.
If you have a small business of your own, you will know how much dedication and hard work it takes to establish your very own brand. Your business obviously has a lot of financial needs which need to be addressed in order to make your company grow. Here is a list of the five financial needs of any small business.
Cash flow is a perennial problem for any entrepreneur. In most cases, there is enough cash to just about manage the business for the first three to four months. So to cover these shortcomings, most entrepreneurs dig into their own pockets.
Around 88% of entrepreneurs have taken money from their personal credit scores to secure funds. Some even go as far as asking for outsider money lenders for loans.
Some problems that drive cash flow in small businesses are variable revenues for seasonal companies, lack of accounts receivable systems, and difficulty in understanding where to allocate funds.
An effective way to manage this cash flow system is to maintain an inventory properly. Make sure the money isn’t tied up unnecessarily in raw materials or goods. Managing an inventory efficiently also ensures quicker customer service and less wastage of unused items.
Taxes are the second perennial problem. Most small companies spend a hefty amount on payroll services that are essential for managing deductions, including both local and federal income taxes.
To add to these problems, complex and ever-changing ways of paying taxes are also there. One smart method of managing this is to hire external tax practitioners or accountants.
They will prepare and pay the taxes on your behalf, lessening your burden. They will also have a much wider knowledge about the tax codes and norms and will pay accordingly.
In the case of external funding, most people turn to banks. But the scenario has changed greatly now. There are so many alternative sources of getting funds for your business. Crowdfunding is one such example, where some platforms offer certain pre-sale or other rewards to investors.
CDFIs are also available; they are institutions that offer loans to companies that are unable to secure loans from anywhere else due to causes like lack of collateral or low credit score. Nearly 75% of CDFI lenders generously lend money to low-income families with their own small businesses.
Data shows that leasing is the most common method of funding any asset. If you want to manage cash effectively in your company, this is a great method. All you have to do is be careful of the changes that might govern these leases, including the ones that you will put down on the balance sheets.
No matter how big or small your company is, you must have insurance. What if a client or worker gets injured while working? There are six main types of insurances that you should consider: general liability, product liability, professional liability, commercial property, home-based resources, and business owner’s policy.
Cybersecurity is also one area where you must have insurance. This will greatly help you if there is any breach of data. Unless you protect your business from certain risks by opting for insurance, it has a high chance of getting into irreparable damage.
If you have a small business and would like some insights as to how to solve your financial needs, https://www.greatsouthernbank.com.au/ is ideal for you. It offers business loans at $0 monthly or annual fees! You also have the liberty to choose your own property as security and can extend the loan period of up to 30 years. So, wait no more and apply for a business loan here now!
Over to you…
Any small business will go through its own financial ups and downs. The important thing here is to manage these smartly and make sure your company grows at a steady pace. Keep these five financial needs in mind and work accordingly to eliminate problems. Once your company is secure in terms of money, it’ll keep developing in a short time.