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5 ways business owners can be financially fit in the New Year

  • Highlights

  • Tackle all business uncertainty by being financially fit

  • Anticipate cash flow needs and arrange for funds

  • Plan taxes in advance and negotiate with your vendors

When your business is financially fit, it can withstand demand and supply fluctuations in the market, and grow operations at a faster pace. So, adopt methods that streamline your workflow and cash flow to achieve good financial health. Here are some of the ways in which you will be able to stay financially fit in the financial year of 2018-2019.

Keep an eye on today and tomorrow's cash flow needs

Cash is what keeps your firm in business. So, keeping a strict watch and control over your business cash flow is the key to achieving success. Calculate what you need to produce your goods and services, from buying inventory, using machines and equipment, paying your staff, paying rent for your business premises, etc. Then predict what your future needs will be, when you have an additional order to fulfill or when you need to expand operations.

See the capital you currently have, and invest it carefully in your business. An annual check is insufficient when it comes to managing your cash flow, so make sure that you go through your requirements on a monthly or bi-weekly basis.

Arrange for business funding in advance

Since you cannot do business without funds, prepare for growth and to meet gaps in working capital beforehand. Look at your options in terms of an investor or partner, look up the process of crowdfunding and study your options when it comes to a business loan. These preparations will help you speed up the process of getting funds faster when the need arises. Consider Bajaj Finserv’s Business Loans that offer funds up to Rs.30 lakh at nominal interest rates. Also, study the Flexi loan facility offered and see if this is the right way to meet your business needs. This unique loan gives you an approved loan limit for your chosen tenor. You can withdraw money from it as per your needs, as many times as you want. You only pay interest on the amount actually used by you, and not the entire amount available. This is helpful when your monetary needs are unpredictable or periodic. Further, you can choose to pay only the interest amount as EMI and repay the principal amount at the end of the tenor. This helps you manage your business cash flow more easily. Keeping these convenient sources of business finance in mind can help you get the funds you need without missing a step.

Plan your taxes in advance

Every business transaction incurs a tax. So, maintain an error-free profit-loss account, all the bills for your business purchases, all the invoices from your business billing, and investment papers in order. Your business investments and purchase of business assets will fetch you a deduction on your yearly tax. When you have these accounts at hand, you can plan your investments more clearly, rather than scrambling at the last minute. Ensure that you consult with a tax expert on how to lower your tax obligations when you purchase business machinery or equipment or lease business premises. A timely evaluation will make the complex tax filing process easier for you.

Check and revise your monthly contracts with vendors

Create rewarding relationships with vendors, and continually seek out new suppliers who offer competitive pricing for needed inventory and delivery. Review the existing vendor contracts you have to check if you can cut down on overpayments. Changing your phone or internet service providers can either help you pay the same and get more benefits or reduce your monthly costs significantly. Buying in bulk is another strategy you can use to bring down the cost of raw materials. So, look over your monthly or annual contracts with all vendors associated with your business to save more.

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Learn from the past

Knowledge is power. Utilise this power for better financial management of your business. You can do this by studying your balance sheets from the past two to five years. See when and how you have made a considerable profit and where your business has broken even. Analyse why this happened, and create strategies that benefit your profitability. For example, say you outsourced a particular job due to malfunctioning machinery for a month. If you see that this was cheaper than doing this part of the job yourself, shut down that wing of your business and outsource it. These strategies will only come to you if you study your business finances in detail. Bringing financial fitness to your business is easy. All you need is a thorough understanding of what you have done, what you are doing and what you will do. These five strategies can be the foundation for you to build a financially fit business in the new financial year.

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