Finance Monthly. Bus i ne s s & Economy 19 PROBLEM 1: Lack of Sufficient Cash Flow A lack of cash flow is one of the top 4 reasons businesses fail. Fortnightly, there are many ways to boost cash flow, such as better account management, limiting discounts, and changing your credit turns. You can also manage your inventory better and avoid overpacking your warehouse. PROBLEM 2: Not Applying for COVID-19 Credits While some small businesses earnedmoreduring thepandemic, most of them lost money. To help companies manage their costs, the government implemented small business credits, and many of them are still available. For example, you can still file for employee retention credit. PROBLEM 3: Inefficient Marketing and Advertising All businesses, whether online or offline, need to market their products and services to stay competitive. Inefficient or general marketing tactics will bleed you dry, but a targeted strategy will work wonders. Conduct a customer audit to help you find and target your specific audience. PROBLEM 4: Not Using a Business Budget Don’t make the mistake of not referring to a budget. All great business plans start with a budget that helps them determine if their finances are on (or off) track. Keep inmind that a realistic budgetmust be flexible, as some economic factors (i.e., the pandemic) are beyond your control. PROBLEM 5: Too Few Capital Investments Businesses that receive significant capital before going public are more likely to succeed. If you weren’t lucky enough to attract angel investors, you would need to rely on bank loans and credit cards. You may need to budget for a personal loan if you can’t lock in a low-interest rate. PROBLEM 6: Unexpected Business Expenses Even the best budgets can’t account for unexpected expenses. Vandalism, storm damage, or a DOS attack could cost your company thousands, but you can prepare for these situations by padding your budget. Try to keep $50,000 to $100,000 on hand in case something happens. PROBLEM 7: Tax and Legal Compliance Small businesses are responsible for different taxes and burdens depending on their structure. To stay legally compliant, companies should review their tax liability and laws surrounding their structure in their state. Otherwise, you could be subjected to fees, fines, and possible jail time. PROBLEM 8: Too Much to Do, Too Little Time Business owners wear many hats, but there comes a point where you need to hire employees to pick up the slack. If you don’t, you won’t be able to focus on the business operations that make you money. Alternatively, you could use software that automates part of the process. PROBLEM 9: Hiring and Retaining Employees The hiring process is incredibly expensive. It’s costly to replace employees, but working on retaining them will keep your business competitive. While you can’t always prevent an employee from leaving, offering a higher salary, better benefits, and flexibility will go a long way. PROBLEM 10: Keeping the Passion Alive You likely started your business because you were passionate about the products and services you were offering. However, when your passion drops, so does your revenue. Addressing burnout early and focusing on why you became a business owner can keep the passion alive. How Small Businesses Can Solve Common Financial Problems Running a business isn’t easy, even when you have a great idea and plenty of customers. A sudden economic downturn could severely impact your bottom line, but it doesn’t have to!
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