Web development is all about bringing clients into the front door. Getting clients in is extremely important,
but if the finances of a small business are bleeding the life out of a company, getting the clients in is a futile effort. Financial management directly impacts the gain, maintenance, and loss of clients. The wide reaching effects of poor money management can be devastating. Financial management problems reverberate through company morale and client satisfaction like a pebble thrown in a pond. There are a few tips to help a small business empower itself to make the most of both its growth potential and maintenance of its clients.
Cash Reserves and Debt-income Ratio
Cash reserves and debt-income ratio are definitely inter-related as far as their effects on a business. Cash reserves both cushion a business in thinner times and allow it to grow when its client load allows. Debt-income ratio impacts how much money a bank will loan a business, and thus its cash reserves. It is very important for a small business to make its payroll when it loses a client, and to be able to bring on a new employee when its client load demands it.
Owner Salary and Separating Business Finances
The separation of personal and business finances and owner salaries are another set of intertwined concepts. Many a small business has failed because of the inability of the owner to separate their personal finances from that of their small business. While driving a very nice car or putting a new kitchen in are great, if the business has to lay off employees that year, it hits a company hard, both in employee morale and customer service capability. Losing employees often costs a company clients. However, company owner should pay himself a salary, preferably from company profits, to both reduce tax exposure and to keep things stable at home.
Seek Professional Financial Advice
From lending woes to tax breaks, a financial advisor can bring great organization and insight into small business finances. Talking to a financial advisor from the beginning can really reduce the speed bumps that are so common for small businesses.