Small business owners face unique challenges in today’s economy. Key takeaways include: small business finance options that work; techniques for making small business “talk” to your customers; creating a personal connection with your customers; marketing basics that apply to all businesses; and growing a customer base even as you expand your business. As a small business owner, you may be looking for proven methods to leverage your time and talent to grow your business. The good news is that there are many programs available to improve your bottom line. However, before exploring different finance programs for small business, it is important to understand the three primary components of good small business finance.
Small businesses do not have the marketing budget of larger competitors, but there are a number of inexpensive ways to quickly build a loyal customer base. Hitting the pavement with direct flyers distributed to your targeted market area and putting postcards strategically within strategic shopping centers can help generate word-of-mouth buzz about your small business. Many times small business owners are the first to notice local trends, such as seasonal sales, special sales, and financing opportunities.
The second primary component of good small business finance is to ensure your company maintains a favorable credit score. This means analyzing your credit scores on an annual basis to identify potential negative trends and improving your credit scores can save you hundreds of dollars each year. In addition, this will also allow smaller businesses to obtain small business loans at affordable interest rates.
Third, many times small business owners utilize less-than-forthright techniques for building sales. For instance, many vendors will inflate the price of items to sell in order to meet the low sales volume and thereby create a larger profit margin for the seller. Unfortunately, these inflated costs often do not reflect the true cost of items sold. Rather than use the invoice price, many sellers inflate the price using other methods such as “the business is a scam” or “the price doesn’t match the value.” While it is important to provide accurate information, using less-than-forthright techniques will only cost you more in the long run. It is often better to be less than forthright with the financial information.
Fourth, many small businesses have a difficult time obtaining loans. Many banks are underwriting small businesses with extreme caution. To obtain a business loan from a bank, a small business will have to convince a bank of the business’s unique qualities. This often means exaggerating the business’s expenses and revenue levels.
Fifth, many small businesses need short-term funding for operations. Most banks will turn down small business loans if they are based on personal credit. While personal credit is good for small businesses, the lack of it does not qualify a business for a loan of this type. To get this type of funding, a bank will require a business to furnish an impressive income statement.
To avoid pitfalls like these, it is important to learn all that you can about the small business owner’s financial responsibilities. You can learn a lot by looking at a business’s balance sheet and statement of accounts. However, books on business finance are also invaluable. With such resources, you can learn a great deal more about small business finance and apply your newfound knowledge to your own situation. It is possible to find books at local colleges or online, but a quick Internet search will return hundreds of links to current books.
In conclusion, keep these self-employed finance mistakes in mind. Many small businesses struggle because they make simple mistakes that lead to financial disaster. By avoiding these traps, small businesses can enjoy the rewards that come from earning their own living. Now is the time to investigate the options available for self-employed individuals.