Are Finances Putting Your Small Business in a Bind?

Dave Thomas

September 29, 2020

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When you run a small business, you know as well as anyone how challenging that operation can be.

From making sure you keep customers happy to having a good handle on your finances, you have a lot on your plate.

With that in mind, could you do a better job with money in keeping all you’ve worked so hard for in the right direction?

Don’t Let Handling Money Get the Better of You

When it comes to handling money as a small business owner, you can’t afford to drop the ball.

According to the U.S. Bureau of Labor Statistics, some 20% of small businesses do not make it past their first year. Meantime, two top reasons they fall short and close are bad cash flow and dealing with large debt.

That said what steps do you need to take now and down the road to better ensure your ability to stay in business?

Among the measures to consider would be:

1. Be smart when it comes to spending money – How good of a job have you been doing with spending money? For example, do you find the best deals for your business? This can be things such as office rent, supplies, and delivery vehicles if you need such things and more. If you are overpaying for these and other items, you are not doing all you can to manage your money the right way. Sit down and go over the costs associated with such to see if you have your eye on the prize.

2. Tracking financial moves – It is also key you properly track all your company finances. Missing a few of them or even one can leave you in a bad position. From ASC 606 commissions and revenue contracts to taxes and more, make sure everything is documented each step of the way. If you need help with any financial matters, look to hire the right professionals. Also make it a point to review the work your financial person or persons are doing for you. It never hurts to have an extra set of eyes on things. With all you have to do in running a business, financial documentation can get overlooked.

3. Getting the tax breaks you are entitled to? – Another key area when it comes to small business finances is getting the tax breaks you are entitled to. This is especially important when it comes to running a small business out of your home. If you are missing out on one or more key tax breaks, it can cost you in the wallet. This can be declaring half of home costs towards mortgage or rent for office space to equipment for work.

4. Paying for employees – If supplying your workers with health insurance, how much do you pay? This is a topic that many small business owners must grapple with. Paying too much for healthcare coverage can eat into their expenses. That said you want to make sure each year when the coverage comes up for renewal that you review it close. According to a 2018 report from eHealth, the average per-employee premium on small group health coverage was a little more than $400 a month. The typical deductible for the same coverage came in at a little over $3,100 per year. You may be able to find a better deal heading into the New Year. That is one that will save you money and still not have a negative impact on the coverage offered.

5. Knowing when to increase prices – Finally, raising prices on customers can be tricky. While you have to be sure you are making adequate profits to stay in business, you can’t hike the prices by too much. If you do the latter, you could see a part of your clientele going to the competition for their goods and services. Review the prices on a regular basis. See what kind of increase you may be able to get away with. That would be without having a negative impact on your customer base in the process.

If properly handling money as a small business owner sounds like a big deal it is in fact the case.

That said using commonsense and staying on top of money will give you a better shot at staying in business.