FINANCIAL STRATEGY FOR SMALL BUSINESS OWNERS

In a Growing Economy, the most suffered Businesses are the Small and Medium Enterprises and Start-ups. Most of the Small Businesses do not have effective Financial Management Strategies, which in turn will lead them to a road that ends up in sufferings and failures.

Effective Financial Management Strategies are very important for a Small Business for its survival and growth. As there is very less manpower in small businesses, there is very low level of intellectual input due to the reason that decision making is an outcome of one single mind or very few minds.

When the manpower is huge, there will be lot of intellectual inputs which will result in effective decision making in an organization. Good Strategy involves Planning, Controlling, Monitoring and Analysing the results to achieve the Business Goals.

Hence for a small Business, the following points will be very essential to decide upon anything to improve the financial health:

1.      Clarity of Business Goals: Small Business owners should have clearly defined Business Goals with detailed plan with regard to funding and financing the business and its activities, budget of how much money will be required and the source for the required sum of money.

2.      Knowledge of Day to Day financial commitments of the business: The day to day requirements of funds in relation to expenses to perform the daily operations of employees and business like electricity, water, transportation, materials etc. must be known to the owners and sufficient cash should be maintained in the business so that the workflow will be functioning smoothly.

3.      Regular monitoring of Financial Health of the Business: Regularly the Small Business Owners need to monitor their Financial Position. Monthly Targets must be set to reach minimum profitable position and measures must be taken to reach those targets month on month without fail. Owners must be informed about the Balance available in Cash and Bank Accounts, Sales achieved and Stock Levels on daily basis. This will help in being in right track of profitability.

4.      Ensuring Collection of receivables on time: Small Businesses suffer a lot when there is delay in Customer Payments. So to avoid delay Payments and default from Customers, Small Businesses must be very strict in making the credit terms and conditions. Also, It is necessary to keep track of Customer’s Accounts daily to avoid delay payments and defaulters. Computerized accounting will be of big use to small businesses to keep track easily.

5.      Filing of Tax and Statutory Reports before deadline: Tax Returns and Payment of Statutory Dues must be done within stipulated deadline to avoid unnecessary expenditures and costs in relation to interest and penalties. Keeping accurate business records will ensure payment of exact dues and within stipulated time.

6.      Keeping the Accounting records up-to-date: Keeping your accounting records up-to-date will ensure that you collect your due customer payments and pay your dues to your creditors, and track expenses accurately.

7.      Efficient Controlling of Costs and Overheads:  All expenses pertaining to daily operations of business must be monitored regularly and reduction of unnecessary costs must be taken care of. This will make the small business run efficiently in profitable path.

8.      Efficient Inventory Control Measures: Efficient inventory control measures will help the small businesses in reducing unnecessary holding of the capital in non-moving stock item for a long period of time. Stock item must move very quickly to ensure good turnover ratio and this in turn will make the company have good financial position.

9.      Know about various options available for funding the business and avail right funding: There are numerous types of funding available for small players in banks and in the form of Government Subsidized Loans. One must acquire full knowledge of the available sources of funding and avail right kind of funding suitable for the business nature. Avail funds from Bank lenders and not from private lenders or personal finance. This will be of help in the long run to the business.

10.  Efficiently tackle any problems when they arise:  As and when any problem arises, small business should not feel embarrassed to take professional help. Whenever required, if professional help is taken at right time, it would help small businesses to avoid problems going to a stage where it is not able to help itself. Exactly know whom should you contact to tackle different kinds of problems. If Legal Problems, contact a good Advocate; If Statutory/ Accounting related Problems, contact your Chartered Accountant or Company Secretary(in case of a Business registered under the Company's Act.)

11. Reach out to your Customers with the help of different medias: Social Media Networking is at its high in recent years. There are multiple ways and budget friendly options to reach out to your Clients with the help of the digital World. You can create websites, Facebook Page, Create Blogs related to your products, sms and email marketing to name a few. Make use of these cost effective methods to reach out to maximum number of people at minimum efforts and time.

12. Unique Product and Marketing Strategy: Small Businesses have to tackle with huge competition in global market in relation to prices, product features, etc. So creation of Unique Selling Point in each product/ product basket is necessary. Also, Small businesses should find unique Marketing strategies to help them sell at good profitable rates.

13. Decision Making: Success of any Business lies in the efficiency of the decisions it makes. So Decision Making should be done effectively taking into account all aspects and consequences.
If all the above points are noted, the Small Business will surely move in the path of its profitability.