Expert Advice for Medium and Midsize Businesses

How to Whip Your Finances into Shape

Di Seghposs
Senior Director, Product Marketing

You’ve got a great product. You have your sales team in place. You’re ready to take risks and you’re bullish on the future. How could you lose?

Every small and medium business (SMB) plays to win. And yet, according to the U.S. Bureau of Labor Statistics, almost half of the companies launched five years ago are now defunct.

Let’s face it: running a business is all about money—revenue, expenses, cash flow, and all those other financial things you need to keep track of in order to stay solvent. If you don’t have a head for numbers, then you need to hire someone who does—because if you don't know how to budget, manage cash, and plan, your business will fail.

If you’re an SMB leader who is “finance-challenged,” these 4 steps can help you (and your company) get started on the path to whipping your finances into shape.

1. Hire a Chief Financial Officer

Many business founders make the mistake of holding off on hiring a chief financial officer (CFO) until their business “gets going.” Don't be one of them.

Make sure you have someone on your leadership team who not only understands all the accounting aspects of your business but also buys in and supports your company’s vision and goals.

With a CFO in place early in the game, you not only have someone who can crunch the numbers, but someone who can interpret the numbers and provide the strategic guidance you need to help drive success.

2. Become More Financially Literate

Even if you have a CFO, accountant, or controller on your team, you need to be able to speak their language in order for a partnership to work.

At the very least, you need to be able to read and understand a financial statement.

Invest some time in learning the basics. Get to the point where you can understand your cash flow, operating activities, and investments. Develop a working knowledge of your balance sheet, including assets and liabilities; your income statement (including that all-important revenue); and the implications of all outside investments in the company, including who's holding equity and how much they hold.

3. Keep Your Costs Down

Labor, rent, technology, communications, and networking are just some of the costs that will eat away at your cash reserves. To survive (and ultimately thrive), businesses must be disciplined with their spending.

Fortunately, there are many areas where smart companies can reduce costs. Free or inexpensive technologies—such as social media—can reduce the costs of communicating, marketing, and networking with potential customers.

But there are other technologies your business will need—finance, payroll, HR, customer relationship management (CRM), and more—where you should carefully consider the value of the service offered. Find the vendors that deliver both quality and value, and then work with them to negotiate favorable terms.

4. Trust Your Finances with a Reliable Cloud Provider

When you’re first starting out, it’s easy to run your finances from a small business accounting package. But as your business grows, hires, and attracts investors, spreadsheets and Quickbooks are no longer enough.

When it comes to venture funding, in particular, investors want visibility into your company’s financial situation—and they probably won’t have much confidence in a shoestring, overly-manual system.

The solution for many SMBs is to adopt finance software in the cloud. It takes a load off your shoulders by managing your entire operation and connecting all of your departments, allowing them to communicate and share data seamlessly.

Cloud finance solutions with built-in best practices can:

  • Manage your financials
  • Take control of operations
  • Manage your supply chain
  • Provide reporting that supports better decisions based on real-time information

With this kind of finance support, CEOs―even financially-challenged ones―have complete, reliable visibility into the financial health of their company and can make the kinds of decisions that will lead to growth, profitability, and success.

Ready to up your game in finance? Read the story on Inc. or GO chat with us.

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