FIXES FOR COMMON SMALL BUSINESS MONEY MISTAKES
If UK accountants are to be believed, far too many small businesses do not heed the most basic advice about finance and budgeting. Avoidable mistakes or sloppy practices can mean more than a bad quarter – they can spell the end of your business if you’re not careful. Here are some common ways that small businesses can start on the right foot or get back on track.
CORRECTLY UNDERSTAND YOUR COSTS AND PRICE YOUR PRODUCT ACCORDINGLY
Small businesses often consider only their materials, their time, and, if applicable, retail mark-up, in pricing their goods. Market research is important, of course, but you can’t start from a low price that you think customers would be willing to pay and work backward from there. You have many other aspects to consider when developing prices.
- Your annual overheads – account for rent, utilities, equipment including furniture and computers and printers. In short, look at every single ingredient that goes into the makeup of your business.
- Shipping – this is commonly missed completely or underestimated. Getting your product from point A to B on time and in one piece is second in importance only to the product itself. Our customers know that pallet delivery is cost effective and time-efficient
- Contingency – any or all of those elements could go up in price, just as sales could go down. Adding 10 percent to your base price can help ease the sting of these situations.
TRACK AGAINST YOUR BUDGET…EVERY MONTH
Be as aware of your business’s budget as you are of your household’s. Even if you don’t spend hours in a spreadsheet each month, you should at least get a handle on costs and income at regular intervals. Having visibility into whether (and why) a routine invoice has gone up can help you head off problems before they start to take hold.
Accountants that specialise in small and microbusinesses say that they routinely get unorganised piles of invoices when it comes time to prepare annual tax returns. If this sounds like your business, think about why this is the case and what can be done to address it.
PUT ASIDE FOR A RAINY DAY
If your business is growing apace and you expect that to continue, you might be tempted to start spending your profits apace as well, whether for ‘fun’, to give salary rises, or to help grow your business. Keep the big picture in mind and start conservatively. When it comes to employee benefits, surprisingly small things – like lunches and incentive programmes – make people feel valued, but it’s always better to under-promise and over-deliver than the other way around.
Most of our customers are small businesses and solo owners, so we understand their concerns and we never forget that their deliveries are their business.