Money is essential for any business’s success. Industry experts, business trainers, and entrepreneurs provided five money-saving suggestions for small firms and MSMEs.
MSMEs and other small business entrepreneurs that fail usually lack an understanding of financial flow. They lack the capital required to re-enter the market, limiting chances for expansion and scaling-up. Several entrepreneurs encountered such significant obstacles during the COVID-19 outbreak.
Accordingly, MSME and SMB owners must be aware of and understand key concepts for making better use of their money and developing their company faster.
Five valuable strategies for using money properly in company and growing quicker were offered by industry professionals, business trainers, and entrepreneurs.
Cash projections
One of the most crucial components of running a business is cash forecasting (projections), which forecasts the flow of cash in the firm.
RatishPandey, the founder of Ethique Advisory, provides “customer-first” business coaching and consultancy.
A rolling 90-day cash forecast, according to the business coach, gives the entrepreneur an estimate of how much income is needed to meet expenditures.
In practise, this enables effective planning — whether it is targeted at cutting expenses or boosting Days Sale Outstanding (DSOs), resulting in better cash management — freeing the entrepreneur of the stress of timely payment of salaries and other responsibilities.
Handling the financial shortage
Ratish suggests that entrepreneurs concentrate on reducing cash gap issues by establishing payment agreements with creditors.
He emphasises that pursuing and retrieving the money in a timely manner will be extremely beneficial. Working with suppliers on payment, releasing working capital, utilising new-age methods such as bill discounting, and obtaining particular finance for raw materials (unique to manufacturing enterprises) would all be tremendously beneficial in closing the cash gap.
Examining operational efficiency to decrease errors, according to Ratish, would also contribute in the smooth flow of cash.
Keep track of your costs
SumitAgarwal, the Founder of Vyapar — which is an inventory management and business accounting solution for SMBs — says that when a company is doing well, entrepreneurs do not pay enough attention to unnecessary expenses (where the majority of the money goes).
He says why tracking daily costs are critical in business. This can be carried out in two different ways: manually or digitally. A computerised tool may track weekly and monthly costs and omit the superfluous ones, saving a significant amount of money that can be used in other critical activities.
He says that weeding out superfluous business expenditures assures liquidity and allows the company to develop quicker.
Cut back on unneeded marketing costs
Sumit feels that entrepreneurs should reduce non-productive marketing costs.
Giving an example, he continues – We see banner and hoarding ads and also some businesses distribute leaflets to promote their firm. These strategies are useful for building brand recall but not for generating and tracking leads. Marketing that generates leads must be prioritised.
He underlines the need of businesses focusing on internet advertising that promotes their online store or business to the target market directly. This will save them a significant amount of money that they can then use in lead generation marketing.
Correct financial understanding
Small firms and MSMEs, as per Ajay Thakur – who is Head, Startup, and BSE SME – require appropriate finance personnel to keep track of their money.
He notes that many times, businesses experience losses due to a lack of financial abilities, thus it is important to seek expert assistance.
These businesses also rely on informal routes for higher-interest-rate loans, resulting in overspending and debt. Ajay goes on to say that entrepreneurs must understand money so as to make an enhanced use of it in their enterprises.
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