3 Ways To Shore Up Your Business Finances In A Tight Economy


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

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Across the country, many small businesses are feeling the brunt of inflation. Rising costs for everything from raw materials and shipping to labor and utilities are shrinking the already thin margins many of them operate. Add to that the threat of a looming recession and other macroeconomic headwinds, and it’s easy to see why entrepreneurs are looking for ways to strengthen their finances and save money.


I recently joined Intuit QuickBooks precisely because I wanted to help small businesses better manage their finances in the face of these challenges. Based on what I’ve seen, the good news is that despite these challenges, there are plenty of ways companies can improve holistic cash flow—often through some simple operational changes and easy-to-use tools and platforms.

Here are three financial strengthening strategies that I recommend to entrepreneurs to best prepare for success.

On the subject: How great entrepreneurs find ways to win during economic downturns


1. Assess your inventory

One of the first things I recommend to product-focused companies that want to improve their finances is to take a critical look at their sales and inventory to better understand their customer base and what affects costs and profits.

For example, shortly after joining QuickBooks, I heard the story of our client, Jessica Spaulding, founder of Harlem Chocolate Factory. While many of us may not realize it, chocolate production is both capital and time consuming, with high overheads in the form of quality ingredients, fair trade, and talented chocolatiers who hand craft recipes and even individual treats. Soaring commodity prices as well as supply chain problems threatened to destroy the business Spaulding worked so hard to build, a message many small business owners can understand.

To combat this and move forward strategically, Spaulding stepped back and looked at what her books were telling her. What products sold the most? What did not have sell? Using these insights, she redirected her team to focus on the products and flavors that delivered the most value to the business and profits. She was also able to cut her overheads in the short term as she cut down on the ingredients needed to create less popular fragrances.

As I mentioned, taking a close look at your inventory and sales history is something any product-based business can do. Use your accounting solution to analyze sales of individual SKUs and look for any trends in your sales – be it seasonal, channel-based, location-based, or dependent on another factor. You can also work with your accountant or bookkeeper to better understand where you can cut costs or double them to increase profits. Finally, once you’re armed with these ideas, put them into practice, as Spaulding did, honing the products that resonate with customers the most.


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2. Provide working capital

It is often said that “it takes money to make money”. The more I talk to entrepreneurs, the more I think this is true. The importance of working capital for a business that is growing or just starting out cannot be underestimated. Unfortunately, the traditional lending system—with long, drawn-out processes and a focus on past business credit—is not designed to support many start-up businesses.

The good news is that now more than ever, business owners can explore alternatives when it comes to getting finance. One option is crowdfunding through websites such as GoFundMe And Kickstarter, which allow businesses to launch digital fundraisers. Peer-to-peer or market lending through platforms such as credit club or Prosper that link borrowers and lenders online are another area to explore. There are also plenty of small businesses grants there, from federal and state programs, programs sponsored by corporations, or some specifically designed for members of certain communities, such as veterans or women. Be sure to save your submissions in a Word or Google doc to refer to later instead of just submitting them via an online form. This will save you some work when completing future applications.

Another path I’ve recently learned is the QuickBooks client path, Grace+Love Sandle Co.. who received funding through us when traditional banks initially turned them down. Unlike a bank loan, Quickbooks Capital does not require an extensive application process. Rather, it determines creditworthiness by analyzing a company’s history as shown by the data on their ledgers.


The most important thing to remember when working to secure capital is not to despair. While you may hear a lot of “no” during your journey, one “yes” is enough, and as I said, there are many different options available to explore.

On the subject: 3 steps to effective management in uncertain financial times or company restructuring

3. Speed ​​up and diversify payments

Now more than ever, consumers (and even businesses) expect hassle-free payment in a variety of ways, from credit cards to PayPal, Venmo, ACH and more. This means that companies need to implement and diversify integrated payment systems, allowing customers to pay across multiple channels (i.e. mobile, online, etc.) and accept different forms of payment. Digital payments not only meet customer expectations and help increase sales conversions, but also mean that money flows into a company’s bank account faster.

While it may seem small, the impact of real-time payments can be huge. For example, instant payments, rather than a few days’ delay, can help a small business owner who needs to do payroll, pay rent, or place an order for supplies. See how quickly your payments are processed. If it’s longer than a day, there are likely options you can look into that are faster.

Over the past few years, entrepreneurs have shown their resilience in spades. Although we may be entering a difficult economic climate, I have no doubt that they will continue to overcome these challenges. The more small businesses can do now to strengthen their finances—from strategically assessing their inventories and analyzing sales to understanding available funding sources and using integrated payments—the better they will be able to succeed despite the challenges ahead.


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