9 Ways To Ease Financial Stress In Your Business
Poorly managed finances are the reason why more than 82% of businesses fail. This troubling figure from the U.S. Bureau of Labor Statistics indicates that financial management is a serious sore point for the majority of businesses across the globe. And when you consider how stressful money matters are and how challenging managing your cash flow can be, it makes sense.
Money is a stressful topic for a variety of reasons. Not only do money issues pose threats to health, safety, food, and career security, but they can also bring up difficult emotions relating to our complex relationships with worldly resources.
But despite these valid reasons for feeling stress and anxiety about money, learning how to ease financial tension is an important life skill that will benefit you personally and professionally.
We recommend using these 9 tips to reduce financial stress in your business so that you can focus on growing your enterprise successfully.
1. Get Your Financial Affairs In Order
One of the first steps you can take towards easing financial stress is to organize your financial affairs. Even if you think your system is relatively organized, making an effort to reassess your systems can give you insight into potential blockages or errors that are causing problems.
All business owners should have a comprehensive accounting system in place that closely tracks incoming funds, outgoing payments, monthly costs, profits, and any other relevant financial data that applies to your operation. This will bring much-needed clarity and structure to your management process and make financial planning easier both in the short and long term.
2. Identify What Your Main Issues Are
Once you have a functional financial system, you need to identify the issues that are causing you stress. Perhaps you’re pouring funds into a tool, platform, or system that’s not worth the money.
Being able to identify a problem is the first step towards fixing it. Without recognizing what is causing you to experience financial tension in your enterprise, you won’t be able to mitigate losses. By shedding some light onto potential resource drains, you can start developing a plan to counter them.
3. Outsource Your Financial Admin Responsibilities
Not everyone is born with natural accounting skills or acquires financial acumen that’s suited to running a business. In fact, only a few people have these skills and knowledge. And they’ve smartly made careers out of it for people in positions like yours to hire them.
If you’re struggling to balance your finances with running your business, outsourcing everything financially related, from your staff accountants to the responsibilities a CFO assumes, takes a serious weight off of your shoulders. In fact, whole teams of professionals can provide immense value by analyzing company financials, providing in-depth insights, and streamlining your financial systems.
Outsourced accounting and finance consultants can take the reins and help to develop strategies that keep the profits rolling in, even when times are tough.
4. Understand Your Burn Rate
A term coined by the start-up sector, your burn rate is the pace at which your business “burns” through cash. Naturally, your burn rate needs balancing to avoid bankruptcy. Essentially, your burn rate should never exceed the rate at which your company generates profit. Keep tabs on this and you can avoid substantial financial strain.
5. Use Fintech
FinTech (Financial Technology) is one of the simplest, easiest, and most effective ways to reduce financial stress for anyone, whether you own a multi-national business or are a freelancer. There are dozens of FinTech tools that are accessible and affordable for all levels of business.
FinTech tools are designed to provide you with the tools and resources needed to manage finances in a fast, accurate, and highly optimized way. Many of them use automation and machine learning to assist with your accounting, payroll, taxes, financial projections and planning, and other necessary record-keeping. ERPs (Enterprise Resource Planning software) with financial modules are also excellent examples of useful FinTech as the software gathers, collates, and analyzes financial data to generate reports.
If you can’t afford an accountant or professional financial advisor at this point in time, FinTech is a more affordable yet similarly effective alternative.
6. Remove Nonessential Costs
In business, there are always nonessential costs lurking in the background. It’s imperative that you find them. Perhaps the rent at your current offices is needlessly high, or you allocate too much of your budget to marketing.
Assessing what your nonessential costs are is one thing, but being brave enough to make the cuts is what counts. Remember, removing nonessential costs doesn’t mean you say goodbye to them forever. It can be a temporary decision until you are in a more stable financial position.
7. Closely Monitor Cash Flow
Cash flow is a nuanced and fickle system that needs close monitoring at all times. The rate and pace that money flows in and out of your accounts are key to the state of your financial affairs, so make sure no detail eludes you. Businesses that have a strong grip on their cash flow are more likely to succeed.
8. Build An Emergency Fund
If you’re currently under a lot of financial strain, the idea of an emergency fund might seem a touch unrealistic. However, this is exactly the kind of thing you need to prevent a financial crisis from occurring again in the future.
You don’t need to start big, even small amounts set aside each month can make a major difference in the long run. Or, instead of simply saving your money, you could invest in stocks or other short-term assets that yield better returns. This will make your emergency fund work for you and keep it growing.
9. Accept That Stress Is Part Of The Deal
The truth is that running any kind of business comes with financial tension. It’s part of what you sign up for when you start any company. However, that doesn’t mean it has to be stressful all the time.
Accepting that stress is a natural by-product of business management can help you to maintain a bird’s-eye view of the situation and keep you grounded, especially during tough times. If you have a proper financial system in place and a roadmap towards the future, you should be able to tackle a number of challenges.
Running a business is not an easy endeavor and money matters are par for the course. They’re also an aspect of business management that causes most people to want to stick their heads in the sand.
However, developing financial savviness can only make your business stronger, more competitive, and set up for success. With these 9 helpful tips, you can reduce the level of financial stress in your business and equip yourself to handle whatever the future brings.
Written by Megan Hudson