Are you working harder but still watching your company’s profitability decline? Do you sometimes feel overwhelmed by the financial challenges that your business is facing? If you do, you are certainly not alone. Of all the possible reasons for lack of business success, financial challenges and drops in profitability are the most common. Here are five things that may be impacting your profitability and some tips on how to handle them.
Inconsistent cash flow can wreak havoc on a business and is the number one reason why businesses fail. If more cash is flowing out of your business than flowing into your business, you need to boost cash flow.
There are many ways to quickly increase cash flow, including:
- Better management of your accounts receivable balances
- Limiting the number of customers you offer credit,
- Changing payment terms to get paid faster, and
- Managing your inventory better.
It’s important to implement and maintain proper cash flow management processes and controls. We can help you develop these and improve your cash flow.
Not Following Your Budget
A solid business plan and a realistic budget will help your business stay on track, but only if you consistently follow it. Your budget should help you proactively manage your income and business expenses in real-time, giving your business a solid blueprint for success. If it doesn’t, we can help.
Insufficient Working Capital
It’s difficult to grow and invest in your business without the necessary capital in place. Having sufficient capital is one of the biggest challenges small businesses face. While some businesses are lucky enough to have angel investors willing to fund operations, most business owners start their business using credit cards or bank loans. Our advisors are experienced in helping businesses solve their working capital issues.
You’ve created your budget, you monitor it regularly, and you follow it without exception, but that doesn’t reduce the likelihood of unexpected expenses. These can have a negative impact on the most careful financial planning. The best way to prepare for unexpected expenses is to pad your budget, and implement good internal controls, including risk assessment, so the surprises are not devastating.
Taxes and Government Compliance
There are a lot of different taxes you’re responsible for, regardless of your business size or structure. Tracking your expenses properly enables you to use some of those expenses as deductions, which can significantly reduce your tax liability. Our tax planning services are forward looking and will minimize your tax liability.
Our Certified Tax Planners and Business Advisors can help you find all the things that are killing your profitability and work with you to turn things around. Call us today and let’s maximize your profitability!