Small business owners have seen their fair share of turmoil over the past 12 months, but with life getting back to (the new) normal, you want to make sure you’re prepared for anything.
One of the biggest stresses for small business owners is finance and you may have noticed that over the past year, many businesses went bust – though not for lack of trying. Lockdowns and social isolation meant they lost customers, had minimal trading hours, and as such, couldn’t keep up with their expenses.
If COVID-19 has taught us anything, it’s that as a small business owner, we need to be financially savvy. The old saying “you need to spend money to make money” is no longer relevant. Today, it’s more about “saving money to make money”.
The following tips will help your small business stay on track financially.
Build a budget (and stick to it)
When the financial year comes to an end, it’s time to start preparing for the next one. Work out a budget for the next 12 months – what are the things you have to spend money on, what might you spend money on, and how much would you need “just in case”. Include details of your expected revenues and profits, cash flow and expenditures. Don’t forget to include your own wages and employee funds as well. And although you don’t have to follow it 100%, try and stay as close to budget as possible.
Switch energy providers
As a small business owner, you want to spend money on the right things – like marketing your business. Unfortunately, many Australian small business owners are forking out more money on things like energy bills than they should. Switching energy providers can lead to a reduction of between 2% and 10% per annum on your bills – which can equate to huge savings depending on the size of your business and energy usage. Shopping around can help you find the best deal. A comparison tool like GoSwitch designed particularly for small business allows you to see the different prices, features and benefits of each energy option. This will help you determine what you want, what your business needs, and what the energy provider offers. It’ll also give you details of how much you’ll save per quarter, and any special discounts on offer.
Develop an emergency fund
When you first start out with your business, it’s a good idea to have the equivalent to three-six months of personal income in savings, as well as extra cash should your business take a fall or have fluctuations in cash flow. Imagine you were to lose your biggest client – would your business survive? And how long would your savings last? You want to have enough money to know that you can still pay your bills and rent should your business have a slow couple of months.
Outsource your work
If you have too much work to do, but you don’t want to hire full-time employees, outsourcing your work can save you money and stress. By outsourcing your general office and administration tasks, you’ll free up your time so you can focus instead on generating income. Outsourcing allows you to use local or international workers to assist with answering phone calls, marketing assistance, accounts, and even generating sales. It can decrease labour costs, saving you money, and increase your business’ efficiency.
The key takeaway is that you want to be ready for whatever 2021 has in store. When it comes to your small business finances, be savvy and don’t take any chances.
This is a sponsored article produced in partnership with GoSwitch.