Small businesses have taken a hit over the past few years with pandemic-related supply chain issues and increased inflation. Throughout these challenges, many business owners have been able to pivot and thrive in the current climate. However, there is always room for continued financial improvements to promote sustainable long-term growth.
To help, 10 members of Young Entrepreneur Council (YEC) answered the following question:
“What’s one action a small-business owner can take today to improve their finances? Why does this action have such an impact?”
Here’s what YEC community members had to say.
1. Forecast Accurately
“To improve the finances of small businesses, accurate forecasting is imperative. You need to determine customer acquisition costs and then plan your budgets accordingly. You should update your forecast regularly in order to adjust your business strategy as soon as changes occur.” ~ Bryce Welker, Crush The GRE
2. Review Your Finances Twice a Week
“Small-business owners should check their finances at least twice a week, at the beginning and at the end. There are a lot of unnecessary expenses that business owners miss, such as old subscription services they no longer use, late payment fees, using a debit card instead of a business credit card for expenses and more. Keep in mind that every single cent matters.” ~ Fritz Colcol, Simply Thalia
3. Improve Your Credit
“Good business credit is pretty essential. When you are in your growth stage, you may need money to purchase the added insurance, a more significant office building or other commercial things to move ahead. With sound business credit, financial institutions will back you up with fresh cash inflow. Without sound credit, you will remain cash-strapped. This is where your business credit profile backs you.” ~ Kelly Richardson, Infobrandz
4. Audit Your Tech Stack and Subscriptions
“So many small-business owners try to save money by automating, then they come to find that the tech does not meet their needs. These software and subscriptions can really add up. Regularly audit your tech stack and subscriptions to improve your finances.” ~ Matthew Capala, Alphametic
5. Set Aside Cash for Taxes
“Each state follows a different sales tax payment schedule — some monthly, a few quarterly and others yearly. We recently had to pay annual sales tax for a state that turned out to be where we have the highest sales. It impacted our cash flow and finances. So, set up a savings account and transfer income and the sales tax liability amount to this account every month.” ~ Vinay Indresh, Spacejoy
6. Invest in Employee Growth
“A very good and effective way of improving the finances of small businesses is to invest in employee growth. When you do that, you attract the best employees who are willing to work hard to bring in more profit. So, you’re indirectly investing in something solid that will bring in more money and make your finances stronger.” ~ Thomas Griffin, OptinMonster
7. Avoid Miscellaneous Spending
“These expenses often go unnoticed, but they can have a significant impact on your finances if you own a small business. The best way to account for these is to assign labels to each expense and not classify them all under a general category of miscellaneous expenses. This will help you identify and cut down unnecessary expenses to improve your finances.” ~ Stephanie Wells, Formidable Forms
8. Improve Your Financial Literacy
“The best thing a business owner can do is improve their financial literacy. This means learning basic financial concepts like bookkeeping, cash flow and profit margins. This action will positively impact the business owner’s finances because they’ll be able to make better decisions about how to manage their money. Additionally, this action can help the business owner avoid making costly mistakes.” ~ Syed Balkhi, WPBeginner
9. Check Expenses and Income Daily
“One way to stay on top of your finances is to quickly check the day’s expenses and income every single day. This may seem too frequent, but it’s a great way to catch any discrepancies early on. This will help you ensure that you’re not overspending. Additionally, this action will help improve your financial forecasting because you’ll have more accurate data to work with.” ~ Blair Williams, MemberPress
10. Buy in Bulk
“The biggest thing you can do right now is buy things in bulk if you can. Many small-business owners only buy what they need that week because money is tight, but you can save hundreds if you buy larger amounts of stuff you know you’ll sell or use. Plus, you can get free delivery if you use a vendor for a monthly order.” ~ Baruch Labunski, Rank Secure
