Category: Business Growth

7 Ways to Boost Cash Flow for Your Small Business

Posted on | by Jessica Weston | Leave a Comment on 7 Ways to Boost Cash Flow for Your Small Business

Cash flow management is one of the most difficult parts of owning a small business. Even if your business is profitable, cash flow problems can make you feel like you’re in a never-ending cycle of feast and famine. If it seems as though money is leaving your business faster than it’s coming in, read on for seven ways to boost your cash flow and escape the financial see-saw ride.

1) Stay on Top of Your Books

We’re willing to bet that bookkeeping is not your favourite task, but it can significantly improve your cash flow. Keeping your records up-to-date helps you to identify areas for improvement and get a handle on exactly where your money is going every month. Cloud accounting software such as Xero, Quickbooks or Freshbooks can make this process infinitely easier. You can upload your receipts, keep track of your invoices and create reports or projections to help you improve your money management. 

2) Reduce Outgoings

It may seem like obvious advice, but reducing your outgoings is important. Once you get a clear picture of your monthly expenditure, get creative and look for new ways to cut costs. This could be cancelling subscriptions, shopping around with utility suppliers or streamlining your workflows.

3) Equipment Leasing or Loans

Buying new equipment outright can put a serious dent in your bank balance and damage your cash flow. It may be worth considering leasing equipment or taking out an equipment loan instead. Both options are more expensive than making an outright purchase but are very helpful in terms of cash flow, so it may well be worth it.

Equipment leasing is ideal if you only need equipment for a short period of time, or if you anticipate you will soon need to upgrade it. You may also have the option to purchase the equipment at the end of the lease, giving you more time to build up the cash reserves to do so.

If you want to buy your equipment but are concerned about your cash flow, a loan could be a good option. Equipment loans function in a similar way to a traditional bank loan, but tend to be lower-risk. Rather than one big lump sum payment, you can pay for the equipment in manageable increments and you will own it once the loan is paid in full.. 

4) Keep an Eye on Inventory 

Holding onto large amounts of stock that isn’t moving ties up your capital, so it pays to manage your stock carefully. You should only purchase stock that you know you can sell. You should also keep a careful track of expiration dates so that you can move products before they become obsolete and regularly review sales figures so that you know which stock moves quickly, and which tends to stand still. 

5) Offer Discounts for Large Orders

If cash is tight, consider appealing to customers by offering attractive discounts for large orders. Not only does this create a big cash inflow that can help you to get moving again, it also helps to shift stock that may have been sitting in inventory for a while.

6) Better Invoice Management

In order to improve your cash flow, you need the money you’re owed to come in as quickly as possible. Sending invoices quickly and being diligent with payment reminders makes a big difference when it comes to getting paid on time; if you forget to chase up an invoice, you can’t blame your customers for forgetting too! 

If you struggle with late-paying customers, introduce a late fee to encourage them to pay you on time. You may also want to consider offering a discount as an incentive for early payment, as this will likely speed things along.

7) Use a Business Credit Card

A business credit card should not be used for long-term borrowing, but it can be a fantastic solution for short-term cash flow issues. This allows you to smooth over any issues and borrow interest free for a short period of time. Of course, it goes almost without saying that you should manage your card responsibly and aim to pay your balance in full each month.

Summary 

With a few common sense tips and carefully implemented strategies, you can boost your cash flow and ensure that your business always has enough gas in the tank to keep going. Cash is king in business and it is often worth making small concessions to profit in order to keep it flowing, for example with equipment leasing or offering discounts for early payments or large orders. When you stabilise your cash flow, you have more freedom to grow and invest, not to mention far less sleepless nights spent worrying about running out of funds. 

6 Reasons for Small Business Owners to Outsource CFO

Posted on | by Jessica Weston | Leave a Comment on 6 Reasons for Small Business Owners to Outsource CFO

As your small business grows, it will also encounter new and increasingly complex financial problems. In this day and age, a virtual CFO might just be the answer to your prayers. Let’s take a look at six key reasons why small business owners should outsource CFO services. 

1) Time 

As a small business owner, you constantly juggle many responsibilities. You are not only in charge of day-to-day operations and meeting customers’ needs; your time must also be spent on managing growth and developing strategy to increase profits. Outsourcing financial services can take a lot of work off your plate, ensuring that your business stays in good financial health whilst you focus on what’s most important: running and growing your company. 

2) Cost 

A full-time, in-house CFO is a costly hire and whilst your small business is in need of financial guidance, you may not yet be ready to cover that cost. A virtual CFO works part-time and remotely with your business, which saves you a significant amount of money. For the fraction of the price of a traditional in-house CFO, you will still gain access to top-level financial management services. You will also be able to scale these services up or down as your business changes and evolves. 

3) Flexibility 

Flexibility is the key to survival in today’s landscape. A single change can have a ripple effect on your entire company, and that means you need to be ready for anything. Outsourcing gives you the power to scale services according to your needs, whereas in-house hires leave much less room for flexibility. A quality CFO will be able to seamlessly scale services for their clients, which gives your business far greater organisational agility.

4) Quality Financial Guidance

A virtual CFO brings a wealth of experience, high-level training and in-depth industry knowledge to you. They function as a trusted member of your team who you can count on to tackle any financial problems your company is facing. An outsourced CFO has worked with many different kinds of businesses and thus be able to use their financial acumen to preserve and improve the financial health of your organisation. Their first-hand experience and top-level knowledge means that they are able to offer an impartial – and invaluable perspective when you have important decisions to make. After all, you can’t make smart choices for your business about matters you don’t truly understand. It’s like throwing darts in the dark, but with more expensive consequences! 

5) Stability 

The recent emergence of the covid-19 pandemic has left many companies across the world in a state of panic. A virtual CFO can help to prepare you for market shifts and tackle the problems that may arise in the ever-changing economic climate. If you’re worried about your company’s fate during and after this crisis, hiring an outsourced CFO could be just what you need to weather any storm that comes your way. 

6) New Opportunities 

Although we’re living in uncertain economic times, there are still opportunities for growth. The pandemic has seen a great deal of loss, but it has also provided many businesses with ample opportunity to grow. Yes, change is scary but it can also be used as fuel for your own success when you know how to spot untapped potential – which is precisely where a virtual CFO comes into play.

Summary

As your business expands, it will only encounter more complex financial issues. Outsourcing to a virtual CFO could be the answer for small businesses looking to save time and money while ensuring their company’s financial health over time. A great CFO will equip you for long-term success without being a drain on your resources; it’s a real win-win.

Get in touch with us today to discuss our virtual CFO services.

Understanding your revenue drivers

Posted on | by Jessica Weston | Leave a Comment on Understanding your revenue drivers

For your business to make money, you need to generate revenue.

You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.

But what actually drives these revenue levels? And how do you get in control of these drivers?

Knowing where your cash is coming from is more crucial than ever

As a trading company, you face the multiple challenges of a global recession, an increase in online consumer buying and a ‘new normal’ when it comes to trading, markets and buying expectations. The better you can understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.

This helps your medium to long-term strategic thinking, and your decision-making, allowing you to be confident that you’re focusing on the business areas that deliver maximum revenue.

Import areas to consider will include:

  • Revenue channels – where does your revenue actually come from? Do you create income from online sales and ecommerce, through retail sales in bricks and mortar stores, or through wholesales to other businesses? You may focus on just one of these channels, or it could be that you use a mixture of two, three or more. 
  • Revenue streams – your total revenue will be made up of a number of different ‘streams’ So, you might be a coffee shop, whose revenue streams include coffee sales, cake and pastry sales and lunch sales. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions. If 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.
  • Product/service split – Do you know which products/services are the most profitable in the business? Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change? The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.
  • Value vs volume – Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin? Based on this, can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue? By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels. 

Talk to us about exploring your revenue drivers

If you want to boost revenue and increase your overall profitability, come and talk to us. We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company. 

Get in touch to kickstart your revenue generation.

What’s your money story?

Posted on | by Jessica Weston | Leave a Comment on What’s your money story?

What you believe about money and how you relate and interact with it affects every aspect of your life and business. A belief is simply a story that you have told yourself so many times that you think it’s the truth. So, for us all to live a vital, vibrant, and thriving life, the story we’re telling ourselves and choosing to believe about money needs to be uncovered, understood, and possibly re-written.

Let’s start by understanding what money means to you, what it represents, and what feelings it evokes. Of course, there can never be one right answer. For some, money can represent freedom, opportunities, or fun. For others, money can evoke feelings of stress, inferiority, and a lack of control. However, money doesn’t have to be any of those things.

The associations that we unconsciously attach to money are (like so many things) based on our understanding, experiences, and environment. Money is just paper, metal, coding, and digital numbers on a computer screen. 

2020 caused us all to pause and evaluate in a way most of us have never had to previously. We had to ask ourselves: 

  • What really matters in this world?
  • How does money fit in with our priorities? 
  • How do we ensure our money story does not interfere with being the person we want to be? 

Often, it’s not money that’s the challenge or problem we need to understand and change; it’s our association to it. This association involves the value we place on money and, more often than not, the value and worth we place on ourselves. We’ve allowed money to be the benchmark for the value of all things we hold dear. We assume that the more we have, spend, or save, the better we will be as people.

But should we always be in pursuit of more money, more growth, and more success? Taking a moment to understand what truly drives us is a powerful and thought-provoking reflection to have. Uncovering our own money story in the greater context of our business and personal goals could be critical to our success. 

While we love to help clients manage their money and grow their business, we believe all business owners should also have time and mind freedom. This means having time for family, friends and hobbies, and reducing the stress so many business owners face.

No matter what your goals are, we’ll help align your business and personal goals to ensure you have financial, time and mind freedom. Get in touch to find out more about how we can help.

“An investment in knowledge pays the best interest.” – Benjamin Franklin

Is your cost of sales affecting your gross profit?

Posted on | by Jessica Weston | Leave a Comment on Is your cost of sales affecting your gross profit?

Do you know how much it costs you to produce each product or service in your range? 

The better you can understand this cost of sales – or cost of goods sold (COGS), as it’s more commonly known – the more ability you have to control your company’s profitability. When you know your COGS, you can set the right price point, control your profit margins and ensure that you’re maximising your gross profit.

But to do this, you need to understand COGS and how it impacts on your financial management.

Understanding your COGS

To take one of your company’s products or services from inception to delivery, you will incur a number of costs. For example, if you’re a manufacturing business, these costs might include buying in raw materials, direct labour costs, the overheads for running the machinery in your factory, the costs of delivering the products and the sales and marketing expenses needed to sell the product to your target customers.

For you to manufacture a finished product and to generate a sale, all these costs are a necessary part of the process. They’re the direct costs of producing your goods for sale.

You calculate your COGS number for the period by looking at the value of your opening stock (or inventory), adding the cost you’ve incurred to produce the goods and then subtracting the value of the closing stock balance.

The COGS formula looks like this:

Opening Stock + Purchases – Closing Stock = COGS

So, if you started with an inventory of ￡10,000, this is how you’d calculate your COGS:

  • Opening Stock: ￡10,000
  • Purchases: ￡25,000
  • Closing Stock: ￡8,000
  • COGS: ￡27,000

Reducing your COGS to boost gross profits

The more sales you make at a given price, the higher your revenue (income) will be. Deducting your COGS number from your revenue figure gives you your gross profit – and gross profit is a key metric for tracking the health and profitability of your business.

A high COGS number reduces the size of your profit margin. And, in turn, a small margin will start to have a negative impact on your gross profit. Being able to control and manage your COGS, and its impact on your gross profit, is a vital skill for any product-based business.

Here are some ideas for improving the profit impact of your COGS:

  • Reduce your supplier costs – If you can reduce the size of the purchases made to produce your goods, that means less expenditure and less impact on your profit margins. Try shopping around for cheaper suppliers, or negotiating better prices with your existing suppliers to bring down costs. 
  • Streamline your production process – the more complex your production process is, the more overheads and production expenses there will be. Taking a lean approach helps you to continually evolve your processes and remove the extraneous elements – cutting costs while still delivering a quality product. 
  • Increase your prices to boost your margins – if your COGS number is eating into your profit margin, one way to resolve this is to increase your price point. This will help to increase income and boost your margin but does require caution. If prices get too high, this can damage existing customer relationships and make you uncompetitive in the market – so think carefully about any price increases before taking action.

Talk to us about improving your gross profit

If you want to boost your gross profit and get COGS under control, come and have a chat with us. We’ll look over your expenses and overheads, and will look for the opportunities to reduce your goods-related purchases and push for a better profit margin on your products.

The Fear of Money and Four Ways to Overcome Your Money Blocks

Posted on | by Jessica Weston | Leave a Comment on The Fear of Money and Four Ways to Overcome Your Money Blocks

Few people are wizards at making money. But it IS possible for anybody to get rid of their money blocks.

Businesses exist to make money. But even with that goal in mind, it doesn’t mean it’s an easy ride to the top.

Money blocks are all too real and common in personal and business finance. Learning to overcome them is an essential thing to do early on.

Here are four ways to help you overcome your own fear of money.

1. Acknowledge the Fear

As is the case with any fear, the first step to overcoming fear of money is to recognise it. Do that and it becomes easier to identify what’s actually scary.

Do you fear the thought of losing money? Or do you fear not making enough money?

Acknowledging your fear, whatever it may be, helps identify the real underlying issue. 

2. Ask for Help

Whether it’s personal or business finances, there’s always someone out there that knows more. 

People who hit money blocks and develop a fear of money are those that never ask for help. But there’s no shame in asking someone more qualified about what you can do in this regard.

Accountants, financial advisors, successful investors and entrepreneurs are all people that may be able to help. Salespeople and professional marketers can also provide insights into specific money problems.

3. Ask for Money

Are you not generating enough revenue? If so, why not consider asking for money? 

Do your due diligence on potential partnerships, investments, and loans.

In some cases, overcoming a money block simply requires an influx of capital from outside sources. It may not seem like the most appealing idea, but it is an option.

4. Develop New Money Habits

Sometimes, the best way to overcome a block is to step outside the comfort zone. 

People run into money blocks because they are fixed in their ways. That’s why making adjustments and developing new money habits can help overcome the fear of money.

It will take work and time. But you already know that one’s mindset can’t be changed in an instant. 

The idea is to try new things and make progress. After all, small successes add up and can alter the mindset.

Taking Action

The fear of money and money blocks don’t always cast a veil on what needs to change. It’s possible to identify solutions and still not overcome fear.

Why?

It’s because the fear of failure can also creep in. When that happens, people refuse to take action and make the required positive changes.

Tackling the fear head-on is always a good thing. Identify what action you should take and pull the trigger to break through the money block.

Learn to Overcome Common Money Myths

There are well-founded fears in the world. But when it comes to entrepreneurs and business owners, the line between facts and myths involving money is not all that clear sometimes. 

It’s vital to learn more about the economic environment as those without knowledge of this area can fall prey to money myths. 

They can end up creating entirely fictional and impossible scenarios for why they have money blocks. That’s also a reason why it’s difficult to see the solution when the issue doesn’t have a strong foundation to stand on.

Do you want to move past your money blocks? Book a call with us today www.sunnysideaccountancy.co.uk/contact

5 Ways to Grow Your Small Business Without Breaking the Bank

Posted on | by Jessica Weston | Leave a Comment on 5 Ways to Grow Your Small Business Without Breaking the Bank

Small business growth often requires hefty investment, but there are ways of growing and improving your enterprise without spending a huge chunk of cash. If you’re trying to build your business on a conservative budget, take a look at the following seven wallet-friendly ways to grow your small business. 

1. Analyse Your Marketing Efforts 

Fine-tuning your marketing efforts can help you use your marketing budget more wisely and achieve a better return on investment. Take a look at the marketing strategies you’re putting the most money into and work out which ones are driving sales. Tools like Google Analytics can help you figure out where your website traffic is coming from, allowing you to prune the practices that aren’t serving your business and focus on the ones that are achieving real results. Social media tools like HootSuite can also give you a clearer picture of the type of content that engages your audience the most. 

2. Fine-Tune Your Website

Many business owners build a website and then consider it a job done. However, your website should be regularly reviewed, optimised and updated to make sure that it’s delivering the best possible results for your business. 

Make sure that your contact information is correct and visible on each page. Strive to improve your loading times – for example, by compressing images – to boost your SEO score. Focus on local SEO strategies to find new customers in your local area and make sure that your site is content rich to attract a bigger audience. 

3. Take Advantage of Trends 

Show your customers that you’re an agile organisation by creating content, products and offers that reflect what is happening in your community and industry. For example, in recent years there has been a rise in micro influencer marketing and a focus on shopping locally due to the covid-19 pandemic. You could capitalise on this by collaborating with micro influencers in your local area, proving that you’re an on-trend business at the heart of the local community. 

4. Upgrade Your Sales Funnel with Content Marketing

If you generate a lot of leads but relatively few sales, then something is going wrong somewhere in your sales funnel. Either you’re not filling the top of the funnel with the right kind of leads, or you’re not nurturing them appropriately to convert them into paying customers. 

One key way to convert leads who are not yet ready to buy into paying customers is nurturing them through content marketing. A first-time visitor to your site will rarely make a purchase, so you need to give them a good reason to keep on coming back. When you share content to your audience every single day, you remain front of mind and build trust. Then, when a prospect becomes ready to buy, voila – you’re right in front of them. 

5. Understand Your Finances 

Knowledge, as they say, is power. Gaining a deeper understanding of your small business’ finances will empower you to make better decisions and grow your business more effectively. Using cloud accounting software such as Xero or Quickbooks can be enormously helpful here, as these programs create easy-to-understand reports and summaries. If you work with an accountant, be sure to consult with them regularly and don’t be afraid to ask questions – a great accountant is not just a number cruncher, but a partner and guide.

Summary 

Growing your business does not need to break the bank. Often, accelerating small business growth is a case of fine-tuning practices that are already in place and capitalising on the opportunities that are already in front of you. By working to improve your existing website and sales funnel, you can generate more high quality leads and nurture them to become paying customers via content marketing. It’s also important to remain agile and respond to local and market trends. Finally, it’s essential that you understand your finances so that you can make smart financial decisions that will really benefit your business growth.