7 Tips to Financially Secure Your SME in 2023
You have successfully taken the bold step to establish that business idea you’ve always had and managed to grow it into a viable source of income. In 2023, the next step is to secure your business with the right financial and investment strategies to take your business to the next level.
But first, what does it even mean to financially secure your business? When it comes to personal finance, financial security is about reaching a stage where one does not have to worry about money or the things that need to be executed with money; doing so by saving, investing and budgeting. For the entrepreneur, financially securing your business involves having control of the operational expenses of the business, having sufficient cash flow, significant savings to cover emergencies and being able to meet business goals.
These are 7 practical ways to secure your SME:
- Set ‘growth’ as your strategy –
First, if having an investment strategy is critical for your personal finance, then it is essential for your business that you set clearly defined goals. Depending on where you currently are on your business’ financial goal, there comes a time when ‘growth’ must be included in your strategy. In terms of expansion or operation, it is important to seize most opportunities to grow your business
- Loans can be your friend
Let’s be honest, governments, wealthy businessmen, countries, all owe a debt to someone or an entity. Your business is not too small to get a loan; in fact, your SME might need a loan even more. However, as a budding business, it is important to note that loans should be channeled towards ventures that are sure to produce returns. For example, your loan can go towards purchasing goods or work equipment, but not the payment of the workforce. One yields capital and returns while the other falls under the category of expenses.
- Practice good financial habits
Right now, you might feel your business is your baby and it does not need to be handled with a professional or ‘strong’ hand. The truth is the foundation your business starts with is key for its growth. Of course, you do not need to have everything figured out as you start out, but you need to practice as many good habits as possible. Some of the financial habits you can implement in your SME at its current stage include proper bookkeeping, maintaining a business account, payment of renumerations, and even investing.
- Businesses need a budget too
Budgets are tried and true when it comes to working towards financial freedom. As a business, your budget should cover all or most of your business expenses and how much you allocate to each. A budget helps you to, not just visualize your money, but also physically see it in ‘action’; you are able to see where your money goes and what percentage is being spent across board. If you are not much of a stickler for strict budgets, here are some budgeting styles that can be best fit for your business budget.
- Manage risk effectively
For a business, there are several types of risk that need to be managed within the business, including overall business risk, credit, liquidity and operational risks. These types of risk can affect some or all parts of the business, so it is essential to place safety measures in place to hedge against risk. An emergency fund is a practical way to start preparing or hedging against risk that falls within the range of operational and liquidity risks.
- Seek financial consultation
As a business owner, you might attend a few workshops, pick up some management skills and perhaps seek advice from experienced business owners. In addition to all these, you should also consult with a financial planner about how best to manage your business’s finances. This advisory will cover issues such as tax, bookkeeping and investment options. With luck, you can work with a financial partner that not only plans your finances, but also helps you to invest in quality financial instruments that serve as a side income for your business.
In 2023, don’t just elevate your personal finances, elevate your business also. GDL empowers you with the right tools and advisory provided by Growth and Development Limited (GDL). Click here to start investing in your business now.