If you’ve just started your own business, you have an exciting but also challenging time ahead of you. Making a success from a small enterprise in today’s turbulent economy is no easy feat, and there are bound to be obstacles along the way. However, the key is careful preparation. If you can anticipate problems and prepare for the worst, you’ll be better equipped to cope no matter what happens.
Here are the 5 common financial challenges that all businesses face, to help you start your preparations:
1. Cash flow
This can present nasty problems in businesses of all sizes, but SMEs are hit by cash flow issues the hardest. You may have lots of orders coming in over the next few months but if you don’t have the cash to pay your bills now, you could be in serious trouble. Careful financial planning is the solution to this one, or you can consider getting ahead using a business loan.
2. Keeping overheads low
All businesses incur expenses, but they can soon add up to frightening sums that can threaten to stop your enterprise in its tracks. The key is to be very conscious of what you spend and trim in every area possible – you may only be saving a few pounds here and there, but it’ll amount to a significant saving when you look at your accounts at the end of the year.
3. Unexpected expenses
Larger firms can absorb large, unexpected costs and overheads with ease, but this kind of crisis can potentially put a small company out of business. If you’re already running close to the bone, a sudden tax demand or equipment cost can be a real worry. Again, the key is financial planning (with the aim of having some sort of rainy day fund put aside) and loans can also be a suitable solution.
4. Knowing when (and how) to expand
If profits have plateaued because of lack of premises or lack of investment, or you have more orders than you can cope with, expansion will inevitably be on your mind. Knowing the right time to do this can be very difficult, as you don’t want to grow too quickly or too much – or you could overstretch yourself. You also need the right financial backing to expand, which is why many SMEs find themselves looking into short-term or cash advance provided by a private lenders like FSB business loans at this crucial stage.
5. No money for new employees
Many small business owners end up doing all tasks themselves, all because there is no free cash to hire anywhere else. However, this is neither efficient or a sustainable way to grow your business. If you’re trying to do it all on your own, you’ll hardly ever have the time or headspace for future planning. You can only focus on the now, but strategy and direction are both incredibly important things to be thinking about. The solution could be to spend more on staff to do the tasks you get bogged down in, so that you can focus more on strategy.