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6 Tips to Help You Bolster Your Small Businesss Bottom Line
by Kevin Carter, Staples® Staff Writer
Small business owners encounter all sorts of financial ebbs and flows, from denied loan applications to accounting challenges. But you can bolster your bottom line by freeing up cash flow if you know how to negotiate, plan and delegate your way to success.
Here are six tips from members of our Succeed small business community on LinkedIn to help you increase your cash flow and run a more profitable business.
Tip #1: Negotiate for Better Credit Terms
Building a good reputation with creditors and negotiating for longer terms are keys to success, according to Marco Terry, managing director of Commercial Capital LLC. Being able to establish credit with suppliers is often critical to the success of a small business, Terry says. You can do this by simply asking your suppliers to provide payment terms. Once you establish a solid track record, ask for net 15-day terms. As your reputation improves, start asking for longer payment terms until you reach 30 to 45 days.
Tip #2: Dont Undercut Your Pricing
Keep a close watch on how your pricing compares to competitors and dont sell yourself short. Do market research by reaching out to prospects and gathering information, says Shawn Greene, sales performance expert at Savage & Greene. Be sure to ask them what they currently pay, not what they think you should charge.
Tip #3: Separate Business & Personal Expenses
Mixing your business and personal expenditures not only obscures how you view your business profitability, but it can also put you at legal and financial risk. Taking time to plan a sound financial strategy is crucial in the early stages of separating personal and business expenditures, says attorney Steven Leibel. Try to obtain separate credit cards for business and pleasure.
Leibel also recommends differentiating insurance coverage for personal liability from your business insurance, while coordinating the two. Seeking advice from an attorney is beneficial, particularly when deciding if you should make your business a legal entity. Becoming a limited liability company, for example, may proactively protect your personal finances in the event that a lawsuit is brought against your business particularly if you have employees doing business tasks.
Tip #4: Get Accounting Help
Just as its important to seek an attorneys help for legal questions, delegating accounting-related tasks can also help you run a more profitable business and free up your time to focus on other pressing business. While the accounting is a critical element of the business, many small business owners, or solopreneurs, get themselves bogged down in the invoicing, the reconciling and the tracking, says Robert Kennedy III, principal coach and consultant of RK3 Performance Consulting. You may not be able to afford an employee, but it might be time to consider the value of a freelancer to complete some of these tasks in order to allow you to spend more time on your actual product or service.
Tip #5: Leverage Technology
Kennedy is also a strong proponent of using computer software and apps to run a more streamlined, cash-positive business. He suggests you ask yourself some questions. What software are you using? Are your CRM, invoicing, proposal and mailing list systems tied together? Can you easily flow from one to the other, or do you have to reproduce information in each application? It may be time to consider some cloud-based tools that have integration possibilities like Xero, WORKetc, FreshBooks, etc. or see what integration options exist via Zapier or another app connection service.
Tip #6: Plan an Exit Strategy
Jim Somborovich, president and CEO of AML/Title 31 Training, urges small business owners to plan well in advance for the potential transfer or sale of their businesses and to account for these considerations in their business plans. Make sure that your business plan includes an exit strategy, because on the final day of your ownership you will be able to determine your net ROI, he says.
Somborovich also suggests you include a description of your businesss legal entity in the business plan. There are huge differences between a sole proprietor, and sub-chapter S and C corporations, and any business venture must be transferable to maximize your ROI.
These six tips can help you stay profitable and help you bolster your bottom line. To discuss this topic with a community of entrepreneurs, join our Succeed small business community on LinkedIn.