Keeping Your Business Afloat: Tips for Small Business Entrepreneurs
According to the Singapore Department of Statistics, the city-state’s Small and Medium-sized Enterprises account for around two-thirds of employment. They constitute 99 percent of all enterprises and contribute nearly half of the country’s gross domestic product. Increasingly, most SMEs in Singapore struggle to innovate and understand their customers. This becomes the top risk, followed by brand reputation risk and increasing competition. Here are a few tips to keep your business afloat and reduce commercial risks.
Integrate budgetary milestones in your business plan
Integrating budgetary milestones helps you understand how much money you have, how much was spent, and how much is needed in the future. Allotting a budget can drive crucial business decisions, like reducing unwanted expenses, hiring more people, or investing in new equipment. If you run out of money, the budget might help you decide how to prioritise your expenditures or change your business plan.
You can protect your company from going into debt or find ways to reduce the debt it is already carrying with the correct budgeting strategy. A comprehensive budget can be used for securing business loans from banks or other financial institutions. Setting financial targets is important to help you stay goal-oriented and give you a metric to measure success against.
Anticipate future cash flows
You must plot your estimated income and expenses to the end of the financial year to anticipate future cash flows. Cash flow is the amount of money going in and out of your business. Negative cash flow could mean the failure of your business, while healthy cash flow can help lead your company on a path to success. Creating a cash flow projection can help boost your business’s success. Some advantages include the following:
- Prediction of cash shortages and surpluses
- Comparison of business expenses and income for periods
- Estimation of effects of business change (e.g., hiring staff)
- Proof of financial capacity
- Flexibility in making adjustments (e.g., cutting down expenses)
In reality, cash flow projection is not for every business. Your cash flow analysis can be costly and time-consuming if done wrong. It is only used as a tool to manage cash flow, giving you a bird’s eye view of where your business is headed. And it can show you where you need to improve and cut costs.
Update your accounts regularly
You must be aware of the daily, weekly, monthly, quarterly, and annual status of your business. Are you profitable? Is your clientele growing or shrinking? Do you have enough cash on hand to pay your obligations? And, are you accomplishing the objectives you established for your company? Without this knowledge, you have little to no control over your business. You must be aware of how much inventory you have, how much you need to order, your clients’ credit terms, and the balance in your bank account to pay for your rent, utilities, supplies, employees’ salary, and payroll taxes.
The best way to improve the financial stability of your company is to keep your books accurate and up-to-date. It enables you to manage your business cash flow efficiently and get the best deals from suppliers and lenders on interest rates. Lenders will initially need recent tax returns and updated financial statements.
Exercise effective time management
Time management is an important skill for business owners. Businesses that utilise time management are better positioned to deliver their products or services on time and consistently. A company with effective time management is also able to address issues as they emerge without having an impactful effect on regular business operations. A planned, structured timetable gives extra time for problem-solving or unanticipated circumstances, which is crucial for firms that depend on steady output to boost ROI.
Minimise the risk of revenue loss
To increase revenue for your small business and reduce the risk of revenue loss, you should focus on your customers, review your pricing strategies, enhance your marketing and sales efforts, and expand your market. Increasing revenues are a sign of excellent financial health of a business. Basic operational marketing and service tactics can help small business owners cut costs and boost revenues.
You must begin with a specific plan that is aligned with your revenue goals. Determine what success looks like and develop the route to get there. For instance, your initial sales target during the start-up phase is profitability. However, once the business makes it through this challenging phase, the next objective is to grow revenues to be able to finance the company’s strategic expansion, surpass gross and net revenue targets, and create reserves for your business.
Utilise innovative technology
Now more than ever, technology allows accountants and tax consultants to connect more effectively and efficiently with their clients through integrated and collaborative software platforms. Technology does not replace them, but instead, offers more opportunities to do their work through closer communication with clients. Platforms, such as Skype, Teams, or Zoom, have made it possible to provide relevant and real-time accounting and tax advice while maintaining human connection. Therefore, to trigger accounting innovation in a company, you need to create a culture of innovation based on technology and include all employees in the process. The result of innovation is better when everyone aims to be innovative.
The challenge of a small business does not end upon its launch. Many survive the early stages and proceed to hold a significant market share. A successful business depends on market sensitivity, innovation, responsible financial management, and strong regulatory compliance. Corporate Services Singapore can provide small businesses with Singapore accounting solutions, so they thrive in the competitive market.