carl
The average business in the UK has a lifespan of just a few years. If you’d prefer yours to endure far beyond that horizon, and to grow and prosper for decades, then you’ll need to take matters of finance extremely seriously. Your ability to keep your business afloat will often depend on your ability to deal with money.
Establish Clear Business Objectives
To succeed financially, you’ll need to understand what your short and long-term goals are. This might mean setting a target for the size of your business, developing a certain key product or service, or simply increasing your revenue year upon year.
Once you understand what you need to do, and how you intend to do it, you can start to work out how to get the necessary financial support – and how long it will take to recoup the investment.
Conduct a Thorough Financial Analysis
Losing sight of your money can often mean losing control of your business. This can quickly spell disaster. As such, it’s important to regularly review your financial situation. This means assessing cash flow, your balance of income, and your liquidity. Identify areas where you are underperforming, by comparing your results with your projections. Of course, in order to do this properly, you’ll need to have made projections. We’ll address this practice shortly.
One thing that’s vitally important to understand is taxation. Unfortunately, taxation can be a difficult thing to understand, especially if your affairs are complex, and your business spans multiple countries. If you don’t pay your taxes, then you might be held accountable – either as a business, or as an individual. It’s usually best to tackle this problem by seeking help from experts in cross-border tax.
Develop Detailed Financial Projections
Forecasts can provide a useful yardstick by which to measure your own performance. But they’re only as accurate as the assumptions they incorporate. It’s worth being realistic, and establishing a clear margin for error. Make sure that you update your projections regularly in order to keep would-be investors on your side. It’s easier to back a given project if you have an idea of whether the fundamentals behind it are sound.
Implement Risk Management Strategies
The financial risks faced by a business can be varied and considerable. A disaster in a foreign market might cause a price fluctuation that impacts your sales. A change in government policy might increase your administrative costs, which you’ll need to make up elsewhere.
By planning for contingencies, and conducting regular risk assessments, you’ll be able to react swiftly and strongly to these changes, and others, too. You won’t need to waste time rushing through a reactive decision, because you’ll already have made it, proactively.
