WNA Blog

Fri 15 Mar 2024

Top Finance Tips For Small Business Owners: How To Stay Spend Savvy


Finance & Insurance

Fiscal responsibility is crucial for every company, but especially for small businesses. Every dollar counts when you’re backed by limited investment capital and operating with minimal staff rosters.

To stay agile and competitive, you’ll need to utilise practical strategies for covering expenses and accumulating capital. And once you do have the capital to fund your growth, you’ll need to know how to invest your profits wisely. 

Continue reading for savvy spending secrets every small company should implement in the fight to secure their long-term financial health.

Practice Categorised Expense Tracking

Part of maintaining an adequate cash flow is prudent expense tracking. Here, you want to classify your business expenses into fixed (office or warehouse rent and staff salaries) and variable (supply costs, utilities usage) categories. Once that’s been done, simply identify and eliminate unnecessary costs by running periodic audits. Identify services and supplies which are redundant or underutilised. Ensure every expense line item directly contributes to your business objectives. To take your expense tracking even further, you can automate payments to gain clarity on cash outflows.

It’s recommended to leverage bank rewards programs to earn points with a business credit card as you pay for services and supplies. This ensures that your expenses can yield valuable rewards like discounts or special offers. Credit spending can also help reduce your business’ overall liabilities over assets.

Organise Supplier Discounts & Business Tax Deductions

Cultivating strong relationships with your vendors and negotiating favourable terms on bulk purchases or other discounts can also help your enterprise save in the long term. Be willing to shop around for suppliers who can meet your needs with competitive pricing on the products your business requires.

Expect a little give and take from this process too. More specifically, small business owners who are looking to enjoy supplier discounts should also be open to signing up for longer-term contracts, allowing you to lock in favourable terms of service and prices. That way, the arrangement can be worthwhile both for yourself as a buyer, and for your supplier.

If you do spend a little extra on your supplier invoices, then you can still make that money back by taking advantage of tax opportunities. Research available tax credits or other potential tax deductions you could make for your small business. For instance, when it comes to tax credits, many programs exist to promote renewable energy investments or regional hiring initiatives. These credits can significantly offset your company’s tax liabilities and may sometimes result in refunds. Identify and apply for the programs that align best with your business activities.

Budget Effectively

Create a budget for allocating resources and achieving your financial management goals. First, identify revenue streams from your products or services and categorise them to clarify which contributes the most to your bottom line. Now, use the expense information you collected to prioritise those essential for daily operations. And don’t forget any business debts; prioritise the higher-interest items to minimise long-term burdens.

From here, use the remainder to establish or contribute to a contingency fund, which gives your business a cushion for addressing unforeseen expenses or revenue dips. Establish disciplined savings habits using an automated fund transfer system to this safety net using an interest-bearing account where possible. Periodically review and adjust the budget based on market conditions and your business’ performance.

Familiarise Yourself With Your Cash Flow

Accurate expense management requires implementing a meticulous tracking system for managing your cash flow. Leverage technology and use accounting software for invoices, receivables, and payables. Ensure each product and service is coded into the program for accuracy.

Getting each part of your operation plugged into this system may take some initial upfront effort. Once complete, the benefits will be readily apparent. You’ll enjoy precisely tracking customer accounts and your company’s bill payment obligations while saving valuable time, versus using a manual system on paper.

With a keystroke, you can run cash flow forecasts for proactive decisions affecting future investments and mitigate possible shortfalls. Additionally, you can plug in potential seasonal promotions or revenue fluctuations to compare different scenarios for optimised decision-making. This clarity helps you prepare for lean or busy periods, allowing you to allocate labour and resources effectively.

Invest In Your Continued Growth

If you’ve been able to implement the spend-savvy strategies we’ve outlined thus far, then chances are you’ve accrued a good amount of capital to fund your business growth. But how can you ensure that you’re using this money effectively? 

Promote growth in your company by setting aside funds for expanding marketing activities, employee training, and technology investments. These enhance your business’s internal strengths, allowing you to better serve customers and leading to sustained revenue growth.

Once measurable and repeated growth is established, consider exploring new markets or innovating with new products and services. Make informed decisions by assessing each option’s potential for return on investment (ROI) along with associated risks. Decide whether diversification using investment in stocks, mutual funds, or new real estate makes sense instead of operational upgrades. 

And remember – strategic, well-timed market bets can help your company level up, assuming diligent preparation and analysis support the decision.

Embrace The Skills Of Your Employees

Communicate to your staff the importance of prudent spending practices. When your team is cost-conscious, everyone in the organisation benefits. You can foster a more engaged workforce by encouraging staff to contribute ideas for expense reduction and investments. They may come up with unique perspectives and solutions, and will feel valued having their thoughts and opinions listened to.

Design and enforce standardised expense reporting procedures to identify spending patterns and potential cost savings. Promoting the open exchange of ideas and using collaborative decision-making for purchases and investments across multiple departments will strengthen your team, and your spending.

Do Periodic Reviews

Finally, the single best measure you can take to stay spend-savvy as a small business owner is to assess your financial statements regularly. Keep tabs on your income statement, balance sheet, and cash flow every month to alert you to fluctuations and identify areas for improvement. Then, compare these with your profit margins to understand the factors contributing to these numbers. This will help you identify areas needing improvement, whether through cost-reduction initiatives or scope for employee training to be increased.

Reviewing past performance lets you focus on the future by making strategic adjustments to improve efficiency. This might occur through renegotiating supplier contracts, optimising labour scheduling, or investing in new software and machinery. 

~

And there you have it – all of our most potent financial tips for small business owners looking to optimise their financial management processes. By embracing the prudent financial strategies we’ve outlined above, such as maintaining a solid budget to control company expenditures and developing positive supplier and employee relationships, small businesses can attain stability, paving the way for their future growth.


Back to WNA Blog

Recent News

Advertising & Marketing
Mon 29 Apr 2024

How to pay less personal tax in 2024

Bronwyn Condon
Advertising & Marketing
Mon 29 Apr 2024

Did you know this about Authorship?

Sigrid de Kaste
In The News
Mon 29 Apr 2024

How Technology Can Lead to Better Corporate Business Travel

Guest Blogger
Business Startup
Tue 23 Apr 2024

Designing for Wellness: How Office Spaces Can Support Women’s Mental and Physical Health

Fonthip Ward
Click to join the newsletter