Small business owners know that the line between loss and profit can be minute. It is therefore crucial that they do all they can to make smart financial decisions for their business. Otherwise, their profits can suffer. Happily, you can find some insightful advice on this exact this topic below. Read on to find out more.
Borrowing is fine, as long as you do it at a low rate
It is unreasonable to expect small business not to borrow money, as they will need it either for startups costs, expansion, or development at some point. However, the way in which they borrow money is hugely important.
This is because money doesn't come for free, no matter whether it is banks, peer to peer lenders, or other financial organizations that you are approaching for a loan. In fact, you will always be charged interest on what you borrow, a figure that is usually expressed as a percentage amount on what you still owe.
What this means is that if you agree to a loan with a higher interest rate, you will be paying more back than you would if you can find a low rate.
Of course, this is money that will, over time come directly out of your profits and so you will have to deduct the cost of this from your revenue. To that end, ensuring that your business's credit rating is as high as possible and that you shop around for the lowest rates you can find are both smart financial decision for your company.
Sell unused assets
Another smart decision you can make regarding the finances of your business is to regularly go through physical assets that you have purchased and no longer use, with a view to selling them on.
In fact, this is an action that can have two benefits because not only will you receive money that can be added back into your business’s budget, but you also free up space at your premises as well. This being something else that you are likely paying for, and at a premium. Therefore riding yourself of unneeded assets will be a double win regarding your business's fiance.
In fact, the same idea can also be applied to space that your business is no longer using as well. In such a case selling this on to another company, or leasing it out can help generate extra revenue and is also a smart final decision for your business.
Track and check expenses
To think that your business won't have expenses is naive. However, it is also equally as naive to expect that you can spend unchecked and maintain a financially viable company. In fact, it is essential that you not only budget for said expenses but find a way of effectively tracking and monitoring them as well.
In particular, it is always wise to keep a close watch on the expenses claims of your staff. The reason being that it can be incredibly difficult to get staff to treat their ‘on the job’ spending as they would there own. To that end, strict rules of conduct and a tight process of application for repayment of expenses to personal accounts is often necessary, if you want your business to be finally viable that is.
Be sure to claim expenses back from tax
It's not just employee expenses that you need to keep a tight rein on, but the allowances that you are given regarding your business tax return as well. Sadly, there can be a lot of confusion when it comes to knowing precisely what you can and what you can claim back when completing your tax return.
Obviously, this can impact on your business's profits because you could be reducing your tax bill by claiming for expenses. To that end, smaller companies can benefit from doing some thorough research and making all applicable claims when it comes to filing their tax returns.
SMEs may also benefit from deciding to employing a tax accounting expert. Even though this will cost them in the short term, it can also save them a considerable amount over the long time in deductible expenses, and so their overall tax bill.
By used equipment
Business equipment and vehicles can be one of the most expensive costs that a company will come across during their time trading, yet such items are often required for companies to run. Happily, there are ways of reducing these costs, and one is to lease equipment only for the duration that it is needed.
Alternatively, if you require such equipment on a more regular basis, it may be worth checking out used auctions where you can purchase good quality items for a lower price. In fact, if you are looking for trucks, agricultural equipment, or even cranes you can see Equify Auctions for listings that are currently on offer. With seller like this, you even have the option to buy the item of equipment now, just in case you don't have time to wait for an auction to finish, but still need to make a smart financial decision concerning your purchase.
Go in house, or gig economy rather than using agencies
Of course, when you are running a business, you are unlikely to be able to do every single task yourself, especially if it is one that needs expertise in a particular area. This is where many companies turn to agencies that work in the marketing, HR, or design, realms.
However, using agencies can often be costly, as they mostly don't charge by the hour but by the value of the project to your business. Such pricing means that development and conceptual time will be included and can result in running up a massive bill for your business.