We’ve tried our hardest to offer solutions to a wide variety of money issues for all kinds of business owners through both our blog and our outreach to the local Madison startup community. If you’ve been following our advice each week, we hope this post should apply to you!
But regardless of how you might find yourself grinning proudly at your bank statements after starting your small business the right way, or making efficient changes when things went awry, exceeding your revenue expectations is a great feeling. No matter how much you make, the need for a management strategy is still there if you intend on keeping the door open to success.
Striking a balance between what should be cycled back into your business and what should be delegated elsewhere is an important accounting task for companies new to handling surpluses. There are a number of different strategies you can employ based on your future financial projections.
Before we look at each of the four plans, a good initial step to make certain your gains are secure is to open a line of credit at your bank. In addition to the advantage of low interest rates on business credit (about 5 percent), this will act as a financial Alamo of sorts in case you overvalue your assets.
After you’ve established a safety net with the bank, here are some possible next steps you can take depending on how comfortable you are with your reserves:
Put inventory first and foremost
Particularly for product-based companies, dealing with suppliers can often be one of the biggest financial and communicative headaches you can count on month after month.
The stress with supply management almost always stems from hashing out payment rates based on your needs and sales projections. With a comfortable cushion of cash underneath you, you can go back to your vendors with firm tenacity when it comes to haggling price rates.
Now you have the leverage to chase larger amounts of inventory at once with an eye on discounting. Drop the interest bearing accounts that had you biting your nails each month and go for bigger returns on investment through better buying and selling.
Invest in your workforce
This option might appeal to business owners who have relied on a dedicated group of employees and associates to do the heavy lifting that earned you the success in the first place.
If you intend on keeping their trust and maintaining the commitment to excellence they’ve provided for you thus far, it’s a good idea to start doling out bonuses once or twice a year based on your allowances. Being safe with bonus offerings means tailoring them to the individual as far as experience and company value is concerned.
A good way to avoid simply sprinkling dollar bills over your workers’ heads twice a year is to turn one of the bonuses toward your benefit plan offerings. Beefing up a 401(K) package, for instance, is a great alternative to a simple extra check at Christmas time.
If you go this route, be aware that routine bonuses can quickly turn into routine expectations––something you should certainly avoid alluding to. Reminding employees that bonuses and their contents are entirely dependent on the company’s success will both keep this expectation from forming while creating a constant work incentive that will surely not be forgotten by your associates.
Go big and make a business acquisition
With an aging domestic population, there are troves of senior business owners looking to transition into retirement by selling off their business to younger buyers.
If you’ve been struggling to make traditional outbound marketing campaigns work for you in terms of generating leads and ultimately gaining new business, buying old ones that still have a competitive stake in the market can be a great way to mitigate new risks by grabbing clients already established in their industries.
For entrepreneurs investing in innovation, this can be a great opportunity to give old success a new face in the digital tech-fueled business world.
Let it be
If you’re not much of a risk taker, or foresee a bumpy road ahead for your business, a safe and commendable approach to surplus is simply staying true to your plan and keeping the money there just in case.
Even though it will earn next to nothing on annual interest, throw it in a checking account and smile at it when you’re sad. If nothing else, having a reserve sitting in a checking account will give you confidence and a level of comfort that will reduce the stress money can often put on a business owners’ life.
If you’re a business owner scratching your head at your success and would like financial guidance from an experienced financial advisor, contact our experts for assistance.