3 Ways to Shore Up Your Business Finances in a Tight Economy

Many small businesses across the country are feeling the burden inflation. Rising costs on everything from raw supplies and shipping to labor and utilities are cutting into the already razor-thin margins many operate on. Add to this the threat of recession and other macroeconomic headwinds, and it’s easy to see why entrepreneurs are looking for ways to strengthen their finances and save money.

Recently, I joined Intuit QuickBooks, specifically because I wanted to help small businesses better manage their finances amid these challenges. Based on what I’ve seen, the good news is that despite these challenges, there are many ways businesses can improve holistically. cash flow – Often with some simple operational changes and easy-to-use tools and platforms.

Here are three strategies for raising finance that I recommend to entrepreneurs to best position themselves for success.

Related: How great entrepreneurs find ways to win during economic downturns

1. Assess your inventory

One of the first things I recommend for manufacturing-based businesses is to improve their finances Analyze critically Your sales and inventory to better understand your customer base as well as costs and profits.

For example, shortly after joining QuickBooks, I heard the story of our customer, Jessica Spaulding, Harlem Chocolate Factory. While many of us may not realize it, chocolate is both a capital- and time-intensive business, with high overhead in the form of quality, fair trade ingredients and talented chocolatiers, who also develop recipes and personal recipes by hand. Rising costs of raw ingredients as well as supply chain issues threatened to disrupt the business Spaulding had worked so hard to build—a message many small business owners could relate to.

To combat this and move forward strategically, Spaulding took a step back and looked at what her books were telling her. Which products were the best sellers? what was not Selling? Using these insights, she redirected her team to become laser-focused on the products and flavors that were driving the most business and profit. She was also able to reduce her overhead in the short term, as she reduced the ingredients needed to make less popular flavors.

As I mentioned, closely examining your inventory and sales history is something that all product-based businesses can do. Use your bookkeeping solution to analyze sales of individual SKUs and Look for any trends in your sales — whether it’s seasonal, channel-based, location-based or influenced by another factor. You can also work with your accountant or bookkeeper to better understand where you can cut or double costs to increase profits. Finally, once you’re armed with these insights, put them to work like Spaulding — hone in on the products that resonate most with customers.

Related: 6 Top Tips for Navigating Financial Uncertainty

2. Secure working capital

It is often said that it “takes money to make money.” The more I talk to entrepreneurs, the more I find that to be true. The importance of working capital Businesses that are growing or getting off the ground cannot be understated. Unfortunately, the traditional credit system—with its long, drawn-out processes and emphasis on past business credit—is not designed to support many new businesses.

The good news is that there are now more options than ever for business owners to explore when it comes to getting funding. One option is crowdfunding through websites like GoFundMe And Kickstarter, which allows businesses to conduct digital fundraising. Lending through platforms such as peer-to-peer or marketplaces Lending Club Or Rich Another avenue to explore is one that connects borrowers and lenders online. There are also many small businesses grant Out there — from federal and state-based programs, sponsored by corporations, or some designed specifically for members of certain communities, such as veterans or women. Instead of just submitting via the online form, be sure to save your applications in a Word or Google Doc for later reference. This will save you some leg work when filling out future applications.

Another path I recently learned about was from a QuickBooks customer, Grace+Love Candle Co., who secured funding through us when they were originally rejected by conventional banks. Unlike bank loans, QuickBooks Capital An extensive application process is not required. Instead, it determines creditworthiness by analyzing the company’s history as shown by the data in their books.

The most important thing to remember when working to secure capital is to not get discouraged. While you may hear a lot of “nos” along your journey, it only takes one “yes” — and as I’ve pointed out, there are countless different options available to explore.

Related: 3 Steps to Effectively Navigating Uncertain Financial Times or Company Restructuring

3. Accelerate and diversify payments

Now more than ever, consumers (and businesses too) expect to be able to pay seamlessly – in a variety of ways, from credit cards to PayPal, Venmo, ACH and more. This means that businesses need to accept and Diversity in integrated payment systems, allows customers to pay across multiple channels (i.e. mobile, online, etc.) and accept multiple forms of payment. Apart from helping to meet customer expectations and increase sales conversions, digital payments also mean that money reaches a business’s bank account faster.

While it may not seem significant, the impact of real-time payments can be tremendous. For example, instant payments—rather than a delay of a few days—can help a small business owner who needs to make payroll, pay rent, or order supplies. Take a look at how fast your payments are currently processed. If it’s longer than a day, there are likely alternatives that you can explore quickly.

Entrepreneurs have shown their resilience over the years. As we enter a difficult economic environment, I have no doubt that they will continue to overcome these challenges. The more small businesses can do now to advance their finances—from strategically evaluating their inventory and analyzing sales to understanding available funding sources and accepting integrated payments—they’ll be in a better position to succeed despite the challenges.