“Plan for the future, because that is where you are going to spend the rest of your life (Mark Twain).”
Have you taken a look at your financial statements lately? Is your small business financially healthy? If not, here are four ways to improve your company’s financial future today.
1. Stay liquid.
How readily can you convert your business assets to cash? If you’re not sure it may be time to consider ways to improve your company’s liquidity, because cash management is a key element of small business success.
Cash balances should show positive long-term growth. For example, “On average, service companies under $5M show their cash balances growing at 13% and revenue growing at 22% – this tells us that the (company) as a whole is headed the right direction.”
Businesses have been holding cash for decades, however in uncertain economic times it can only help to develop a liquidity plan. If you’re cash flow positive, start by saving a certain percentage of sales for a rainy day. Planning for the future with anticipation for access to cash is a smart move for every small business.
2. Curb debt.
Think carefully about taking on additional credit card debt. Credit cards are now the most common source of financing for America’s small-business owners, according to a National Small Business Association survey. Review your current credit card interest rates, fees and shop around for better rates and renegotiate more favorable terms.