Business owners are forward-looking by nature. They see opportunities where others don’t, they spot potential problems from a mile off, and when they close their eyes they can clearly picture where their business will be in six months, one year, or ten years.
But looking-forward is only one part of the business puzzle, and true visionaries know that in order to see the future clearly, you need to stop and take stock of the past.
Your business is dynamic; it changes every day. In the course of a single year, your business evolves and adapts to the forces of the market, it takes small steps and huge leaps, and the best way to ensure that your business is growing in line with your basic goals and ambitions is to compare where you are with where you want to be. If your business is in debt, if your cash flow is a mess, and if your clients routinely pay late (or not at all!), then your business credit is in jeopardy and the financial health of your business is at risk.
Take a moment to evaluate your basic business credit practices and set goals that will ensure that your company is on the right track to have stronger credit, more financial flexibility, and less debt twelve months from now.
Simplify, Renegotiate and Save
When businesses begin to accumulate debt, they often stray from simple positive payment practices. It is easier to rationalize paying a bill late, or carrying a balance month to month, when your business is already in debt, but at any time you can take control of your credit by resolving to pay every invoice in full and on time. Bad credit is like a leaky faucet, and you need to stop the steady drip drip drip of debt accumulation before you can focus on streamlining your operations.
One of the easiest ways to save some cash is to shop around for new contracts with lenders and suppliers. This will be much easier to do if your business has been paying its bills on time for a period of at least six months. You should not feel hesitant to approach your current business partners and ask to renegotiate the terms of your agreement. Your venders and loan partners want to retain your business, and you may be surprised to find that you can get a lower rate simply by asking for it.
Any money you save should be used to pay aged payables and outstanding debts. Focus on your problem areas and in another year you will be able to stop, take stock, and see the progress you have made.
Photo Credit: Hartwig HKD, Flickr.