Overcoming the Financial Challenges of a Growing Business

A business expansion comes with its share of risks and responsibilities. It is no surprise that so many entrepreneurs dread the same despite the significance. However, the truth is that by preparing yourself in advance you can plan better and overcome the challenges easily.

The following are the top financial challenges that are set up against when expanding your business:

  1. Slow Cash Flow

In an ideal world, your business cash flow would keep pace with the growth. However, that’s seldom the case in reality.

When growing your business, you need to make sure that enough revenue is generated periodically so that your increased expenses can be dealt with easily. If you have any debt, then you must take that into consideration as well.

Many times, cash flow is not as speedy as you want it to be. So, you can enact some policies that can minimise the risks. For instance, you can create a “one-week-maximum” invoice clearance policy, as per which the clients making the payments after one-week grace period will have to pay an additional fine. Similarly, you can notify your vendors to supply the products/services on time to keep everything in sync.

  1. Funding

While optimizing cash flow is important to prevent potential obstacles that can hinder business growth, you also need more money for new equipment, marketing and sales instruments, extra staff, and more. For this, going the traditional way such as angel investors could be a good idea. However, you can benefit even more from alternatives such as:

  • Crowdfunding Campaigns: This can work out excellently if you are planning to launch a new and innovative product(s) that the people are likely to be excited about.
  • Invoice Financing: Invoice Financing has been around for decades and is a good option if your business is already doing great.
  • Peer to Peer Lending: You can get better interest rates at better terms for a business loan from a P2P firm in comparison to a traditional bank.
  1. Finance Management

Managing money in a business is difficult itself. However, when the business expands, then additional moving parts emerge on the surface and the structure becomes complicated. So, a smart thing to do at this point is to get a CFO onboard.

You need a finance expert to handle all the money if you want a smooth ride ahead. However, if that’s too “expensive” for the business at this point, you can hire a good accountant or someone from with similar skill set. At the very least you should have an enterprise-level accounting, finances, and expenses management software program to make money management easier and simpler.

  1. Staff Costs

As your business grows, you need more workforce, more staff. However, it can be difficult to pay all the employees full salaries without affecting the cash flow. So, you can take a smart approach towards it such as:

  • Outsourcing: More and more people are working remotely these days as crowdsourcing is becoming a popular trend in the recruitment industry. You can find all kinds of talents-accountants, programmers, designers, personal assistants, at what not, with different remuneration requirements and expertise. Moreover, it’s easier to find a decently skilled employee at a much lower rate on a contract basis.
  • Fresh Recruits: If experience is not really important to you, then you can also consider hiring fresh college graduates. The plus-side of this is that you don’t have to pay them full salaries. In fact, you can have them work for free in exchange for some quality experience.

Finance is at the core of every business. So, be sure to know your numbers at all times. There will always be problems- even more when your business is growing since they are a part of the journey. However, if you know your numbers and think clearly, you can overcome any kind of financial obstacle and move ahead.

Choose Your Right Bank For Your Business

Who Are You Banking With? Choose the Right Bank for your Business

Managing your finances in the first year of your business can be tough but the right bank can make all the difference.  With many banks who have the services you need, the two questions you have to answer are:

– How do I pick the right one?

– Who is giving me the best of services?

Gone are the days of mountains of paperwork, banking has also become a seamless aspect of our life thanks to digital services.

Here are five things to keep in mind while selecting the right bank for your start-up:

1. Business Costs and Cash Flow:

The first thing that you need to do while setting up a business is assessing your costs. Analyse your financial needs and choose a bank that provides services that will benefit you the most. Oh, what a headache, right? Let’s make it simpler – as a small business, you need to consider three aspects – start-up capital, growth capital and cash flows.

So, remember these factors and choose a bank that will offer you these services:

  • Range of business loans such as starting capital, equipment loans, expansion loans, etc. with:
    • Shortest application and approval times with easy online applications and verifications
    • Attractive rates of interest
    • Automated EMI payments and reminders
  • Suitable account-based services, such as:
    • Digitised account management, creation, and deactivations
    • Stock market and investment insights as well as advice
    • Liquid accounts with minimal costs
    • Easy, online fund transfers and payments
    • Automated online transactions

2. Banking Services:

Banks have become more customer-friendly and I’m sure they have made your lives easier too. But, we all know how banking works now – there are innumerable services offered by each bank! So how do you find the right one? The first step is to look for a bank which will allow you to digitally conduct most of your banking and financial needs.  

Internet banking has made our lives so much easier – fast-paced transactions, online applications and verifications, automated payments, account management, rapid assistance, and much more! For example, certain banks allow you to add a payee in 30 minutes with almost immediate fund transfer – a great way to save time and keep suppliers or vendors happy. Some other banks have rapid loans and payment approval timelines which reduces the time spent on banking and also, makes it convenient.

3. Banking Expenses:

We all know how banks charge for transactions and accounts. But, if you don’t keep a check, you can end up losing a chunk of your revenue in banking expenses! To avoid that, identify a bank that can offer you services at nominal costs, which include:

  • Transactions, payment getaway and bill payment charges
  • Account maintenance and creation – minimum deposit ledgers, deposit and withdrawal charges
  • Loans, mutual funds and investments – application charges, interest rate, premature and late payment charges
  • Credit/debit cards – application charges, interest rates, late payment charges

4. Terms of Usage:

Based on the services that you essentially require, choose a bank with operations and regulations that best suit your needs. Carefully review all terms of usage before choosing a bank to keep a check on, such as:

  • Unnecessary charges and procedures
  • Risk factor
  • Account liquidity criteria
  • Availability of services

Opt for a bank who will keep digitally updating you with changes in policies and regulations – through emails, SMS or push notifications on apps.

5. Size Matters:

Make sure you plan for the success of your business and choose a bank that can fulfil your future needs too. For example, you will not have to pay extra for ATM usage or foreign transactions when opt for an international bank. Alternatively, large-scale banks, whether national or international, will be able to assist you better with business growth and expansion scenarios.

When you are looking out for the right bank, don’t simply select the first one that approaches you. Go out there and find the one that fits your needs and understands you in a manner that helps shape your financial journey. After all, your business is your castle of dreams!