Strategies to be implemented to reduce financial stress in businesses

Strategies to be Implemented to Reduce Financial Stress in Businesses

by with No Comment BusinessFinance

Strategies to be Implemented to Reduce Financial Stress in Businesses

Running a business a tedious and demanding way of earning one’s livelihood. The sheer amount of meticulous planning and mental preparation to fail can get the heart pounding heavily. Businesses, despite the tremendous pressure, not only thrive, but also flourish, expand and become the reason so many people in the world find employment. Keeping your boat afloat requires a solid base and a strong captain at the helm who takes all the decisions with an equally strong mind. This strong base for business is finance. A businessman who knows how to handle his money seldom finds himself in trouble.

Let’s go through some key strategies experienced businessmen implement to make sure they keep financial stress either at bay or at minimum at least

  • Getting Cash Flow Regulated

Billings, records, invoicing and payments(both inflow and outflow) work best when there is a systematic flow chart ready and implemented in place. Your associates as well as employees this way can expect when to receive their salaries. Your clients/credit customers can also make arrangements accordingly when they know the date to clear all the dues. One of the most common reasons for people running into financial trouble is unregulated and erratic money flow cycles. Get out of business with people who are neither providing any good business nor making payments systematically.

  • Get an Accounting System/Accountant in Place

Accountants are trained and qualified to handle the matters of money properly. If your business scope is large, and you find it too tedious to handle it alone, hiring an accountant will help a lot. The accountant will find out all the loopholes which are sucking a business dry and once the holes are plugged, the coffers begging filling up again. An accounting system/ERP system does the job of an accountant while requiring lesser manual intervention.

  • Start Making Forecasts

Knowing the direction in which the wind is blowing is a very important attribute of a smart entrepreneur. Keeping a close eye on the economic conditions, changing supply/demand equations, billing gaps etc. are important parameters to be able to make an informed forecast of the upcoming situation.

Let us take the example of a desert cooler. Supply and demand is very different in the summer as compared to winter. Traders invest more money into buying high-quality stock for the same right from January to make good sales around April-May when the summer is at its highest intensity. The same kind of attention goes away come October and when the mercury begins to drop.
Similarly, predicting when the demand for your product/service may drop in the upcoming time will go a long way into making life easier during stressful times.

  • Start Focussing on Retaining/Gaining Customers

Customers are the backbone of every business. A business cannot run without customers. Your customer can be an individual, end-user, or even another business. In any case, losing a customer almost certainly means bad publicity. It is very easy to get bad reviews, difficult to get good ones, and extremely rare to get excellent ones. One retained customer is half-the-win over the financial stress. Regular customers also mean regular payments, which can help you tread through dangerous waters with lesser problems.

  • Liquidate Assets

This one is very tricky and must always be adopted only as a last resort. There are times when business slows down despite you doing everything you can to keep it running. This is the time when your appreciating asset investment would come to the rescue. When the times are good and you have surplus finances, use them to either reinvest in your business to make it better and bigger, or try to get an asset in the name of your business.

E.g. Surplus money from a well-doing shop can be used to purchase another shop/land in another area. You may open another shop there or simply use it for rental income.

This shop that you, or rather your business now owns will come in handy should everything still go haywire. Assets can be in multiple forms, not just land.

In a Nutshell

The COVID-19 pandemic brought about a huge catastrophe upon the world. Shops were closed, service-based businesses took a huge hit, manufacturers had to shut down their facilities for a long time. And as a result, all this resulted in a huge dip in the economic condition of the world. Millions and millions of businessmen found their livelihood in grave danger of being, wiped out courtesy of an infectious disease. Entrepreneurs with acumen and planning were able to get through it with relative ease. Businesses are now getting back on track and picking up pace once again. This is the perfect time to start planning and making your forecasts about the next few months.

Remember, a businessman who handles money systematically keeps a track of all income/expenditure and gives thought to keep emergency funds rarely finds himself facing financial stress even in the worst of times.

If you are looking for the right solutions for your small or medium business, or even substantial and appropriate advice or mentorship, click here.

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What Is Zero-Based Budgeting, and How Can it Help Small Businesses

What Is Zero-Based Budgeting, and How Can it Help Small Businesses?

by with No Comment Finance

To stay on top of your business expenses, you need to constantly plan and update your small business budget. When you make a traditional budget, you use the previous budget and tweak it. This might not be the most effective way to make a budget, especially for small companies. Another option is zero-based budgeting. What is zero-based budgeting?

What is a budget?

Before learning about zero-based budgeting, it’s important to understand the different parts of a typical business budget. Here are three things a budget needs to do:

Project revenue: How much will you earn?

Determine expenses: How much will you spend?

Predict profits: How much will you have after expenses?

What is zero-based budgeting?

Zero-based budgeting (ZBB) is an approach to making a budget from scratch. The budget is not based on previous budgets. Instead, the budget starts at zero.

With zero-based budgeting, you need to justify every expense before adding it to the official budget. The goal of zero-based budgeting is to reduce spending by looking at where costs can be cut.

Your employees might be involved in creating a zero-based budget. You can ask employees what kind of expenses they will have and figure out where you can reduce business expenses. If an expense does not benefit the business, or if it can be done in-house, it is axed from the budget.

Zero-based budgeting process

There are a few different steps in zero-based budgeting to keep in mind. The process of zero-based budgeting follows the same basic steps:

i) Identify business goals

ii) Develop and analyze new ways to achieve goals

iii) Discover new ways to fund business processes

iv) Prioritize funds

By following these zero-based budgeting steps, you will determine what expenses go toward achieving business goals that directly benefit your company. Then, you can find new ways to spend.

With ZBB, you might find that your budget fluctuates significantly between periods. You might have a budget of 5,00,000 one year and 3,50,000 the next, since budgets aren’t based on previous ones.

When to use zero-based budgeting

As a small business owner, you’re busy. You might not have time to make a budget from scratch every few months or even each year.

Some companies might benefit from creating a zero-based budget once every few years and using a traditional budget in the meantime.

Zero-based budgeting vs. traditional budgeting

Unlike traditional budgeting, zero-based budgeting does not look at budgets made in prior years. Traditional budgeting looks at prior-year budgets and adjusts based on the information in those budgets. For example, if you hire one new employee, you would increase your budget since you would add new wages to your payroll expenses.

Zero-based budgeting is more time-consuming than the traditional approach because you need to start from scratch and strategize where your expenses can be cut. You need to know where every dollar is going to implement zero-based budgeting.

Both zero-based and traditional budgeting are important in creating departmental budgets. If you have managers of different departments, you might allocate funds to them for the year. With traditional budgeting, managers are encouraged to spend their allowance so they don’t lose it. Zero-based budgeting is a little more frugal, and you might not see unnecessary spending, since every expense is accounted for.

How can zero-based budgeting help small businesses?

Zero-based budgeting is a great way to improve and manage your small business budget. It can help you:

Create your first budget: Zero-based budgeting is necessary if you are a startup. Startups do not have previous budgets to look at, so you would need to start from scratch. This gives you the chance to really plan your budget and shop around for the most inexpensive vendor.

Save money: Zero-based budgeting can help you save money and improve your profits for the year. By analyzing where unnecessary business expenses are coming from, you can eliminate them. Instead of doling out cash for the same things that have no benefit to your business, you can strategize how to effectively spend money.

Know where money is going: If you give managers a budget, you want to know where the money is going. Managers must write a description of how much money they need and what they will use it for.

Top lessons business must learn from covid-19 to grow post pandemic (1)

Top lessons businesses must learn from COVID 19 to grow post-pandemic

by with No Comment BusinessEcommerceFinance

Top lessons business must learn from COVID 19 to grow post-pandemic

The pandemic has accelerated the workflow of organizations at a faster pace. Great leaders across the world started to adapt to the evolving patterns of running a business in the new normal. This adaptation led to the rapid increase of remote working jobs and accelerated the service-based industry. This transition laid a path of growth plans, forcing organizations to quickly provide the service infrastructure and comply with the resources that are available at home. The pandemic has provided an opportunity to be resilient and adapt to the changes quickly.

Although the pandemic was initially a disguise many organizations increased their service capability during this tough transition period and have held numerous zoom calls and employees made the service flow of the organizations had never stopped.  

This pandemic has taught many things such as:

  • Business agility and what it means?

The pandemic provided a great lesson in terms of contributing to the agility of the companies, as the organizations had to adapt to a new normal way of doing business. This made organizations realize how important it is to adapt to new conditions and changes in the market. 

This made organizations shift gears and fill the gaps by pinpointing the errors and providing a room for them to build in future post-pandemic.  

 

 

  • Why digital transformation is important

 

In the pandemic, each and every product or service-based company had a question of how do they expand their business for the virtual audience. This pandemic provided them with an extra asset of building a strong digital presence in order to scale the business. Never the late, all the companies and organizations have shifted the gear towards the digital media and started performing their marketing campaigns.

This provides an excellent answer to the questions of why digital transformation is important and beneficial to the organizations that are planning to stay in the market for a long time. 

 

 

  • More technological interference, faster the solution to the problem

 

The onset of the pandemic has made organizations believe in technology for their problems and how efficient they can turn out to be in the way they are utilizing the technology to solve their marketing needs. 

The pandemic has made small and medium businesses adapt faster to technological needs and find the solution of reaching the audience as soon as possible to sustain this tough phase. 

This pandemic made organizations and companies realize how to use digital media and technology to the fullest in order to enter a sustainable market and look out for the long term growth. 

 

 

  • Hand in hand will lead towards the future

 

The major lesson that businesses can pick up from the pandemic is the importance of effective communication.

According to the CISCO survey, many companies have tied with the local business in order to go hand in hand with them and scale each other’s business during this tough time and upvote in the future. 

 

 

  • Communication the ultimate key 

 

The crucial aspect of working remotely in this pandemic has led to effective communication between the employees and became the ultimate key in order for the business move forwards, through all the error messages and missed voice calls, the companies and organizations have certainly realized that communication is the ultimate key. 

Apart from the employees in the organization, it is also important to be in touch with loyal and loyal customers to keep hearing from you and it led to a massive shift in crossing the digital boundaries in keeping the customers updated about their product or service. 

 

 

  • Health is wealth

 

The pandemic has taken a huge toll on the health and wellbeing of any individual who is working remotely, with only confined to 4 walls, the mental health toll and the ultimate wellbeing balance is disturbed to maintain the work-life balance. 

The employees found it hard to adapt to such conditions and according to the CISCO survey, 59% of the employers of the bigger organizations found it difficult to maintain the staff, momentum and the morale in such tough times.

The companies have adapted to the old saying: “Health is wealth” and started working towards it predominantly.

 

 

  • The remote hires

 

The pandemic has substituted office work with plenty of remote work, and this lead to opportunities to find that are willing to work remotely at a cost of unpaid internships

The increase of acceptance of working remotely has boosted many morales in the organization and provided a tension-free environment. 

It is suggested that companies do stick with this plan and employees who have accepted the offer to work remotely have a greater command over the concept because now they will be learning the same thing at the cost of comfort zones. 

If you are looking for the right solutions for your small or medium business, or even substantial and appropriate advice or mentorship click here.

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