Improving your bottom line in 2 months or less
If you are not wise with your small business finances, your dream can quickly become one of those small businesses that fails within the first year of operating. When a small business starts to have problems with their bottom line, it can quickly fail if you are not careful and don't take action to fix it. Here are some simple tips that will help you fix your bottom line in 2 months or less.
Tip # 1 - Focus on everything
Some people just like to focus on their expenses and their income when they are working on their bottom line. Instead of just focusing on the big numbers, focus on all the little details. Start by adding up all of your expenses so you know what your break even costs will be. Once you have this figure, take a look at your income and then make a prediction as to where you would like your income level to be. Some businesses don't realize just how much their sales can fluctuate and the current number they have may not be accurate 2 weeks later.
Tip # 2 - Track everything
Just adding numbers is one thing, but how are you tracking your numbers? Do you have an accountant that handles everything for you or are you working hard to manage these numbers on your own? How do your employees report their expenses to you? Your best option is to purchase a good financial software program like QuickBooks. This will help to manage all of your numbers and it can help you prepare sales reports and it will also help you with taxes. Keeping track of everything is a great way to find expenses that are unnecessary and to start cutting them from your accounts.
Tip # 3 - Negotiate
A great way to save money to help your bottom line is to negotiate with your vendors. Ask them if you can lengthen your payment terms so you have a longer time to pay while you try to collect money from some of your past due customers. This same rule applies to your customers; you need to shorten their payment terms. Start asking for down payments when they purchase materials from your company so you have at least enough money to cover your break-even costs while you give them an extra month to come up with the rest of the money.
Working on collecting money from your customers can be challenging because you will have some people that just don't want to pay. If you have a few of these customers, you may want to sell off your old invoices to a factoring company so they can worry about collecting the money. You will receive 80 to 90 percent of the total invoice amount and this will provide you with money you need right now to improve your bottom line. It will also take away the frustrating collection process of trying to get customers to pay.
Tip # 4 - Increase sales
Another great way to help your bottom line is to start boosting your sales. Set some realistic goals for your sales team and encourage them to work harder. Don't rely only on your sales team to work on boosting sales, you also need to get out there and generate some new sales. Look for new marketing opportunities like combining advertising with some of your sister companies. It's a simple way to reach a new audience and to gain new customers. Ironically you may not think that slashing prices will help your bottom line, but it will. Try offering a big sale to your customers that will encourage them to buy your products so you have enough money to cover your expenses. This will also generate an increase in web site traffic and it will boost your exposure to a new audience.