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Factors That Determine The Financial Success Of Your Business

  • Highlights

  • Control costs from the very beginning to ensure maximum efficiency

  • Up-sell and cross-sell your products for better earnings

  • Decided between outsourcing work or doing it in-house

  • Learn how to manage debt effectively

Every business owner wants to enjoy the financial success of his or her business. Apart from the satisfaction that comes from building a profitable business, reaping the financial rewards is the ultimate goal. To ensure that your business achieves consistent profits, ensure that you are paying attention to these important factors:

1. Controlling costs

The primary goal of any business is to ensure maximum efficiency by minimising costs. Uncontrolled costs eat into your profits and reduce your efficiency. For example, a car mechanic needs to purchase various spare parts and tools for his business.But, he can improve his cash flow by buying spare parts only when there is demand, instead of tying up money in a large inventory.

He could also examine which spare parts are commonly used by checking his work for the past few months and buy those in advance, rather than spending on those that aren’t usually required. Another way to save on costs is to buy equipment that is of higher quality and come with warranties. These measures will help eliminate frequent repair and replacement costs.

Additional Read: How to Setup Your Own Trading Business

2. Up-selling and cross-selling

Up-selling involves selling customers more than they had approached you for. For example, a digital agency who is approached to create a static website informs the consumer about the benefits of creating a dynamic, mobile-friendly website at a slightly higher cost. On the other hand, cross-selling is offering additional services to the consumer. For example, when a car mechanic is asked to repair the clutch plate, he also persuades the consumer to have his brake fluid replaced. Here, the brake fluid replacement complements the clutch plate service and hence works as a good cross sale. Actively up-selling and cross-selling your products and services will help multiply your revenue.

3. Collecting payments on time

If you don’t have a well-oiled payments collection process, you won’t be able to pay for the essential expenses of your company on time. For example, a car mechanic will need to pay the supplier from whom he bought a clutch plate. But, if the customer delays payment, the mechanic won’t be able to make a timely payment. If this happens repeatedly, the supplier could cancel the contract or demand that the mechanic pay for the parts when he takes delivery of them. So, think of ways that you could hasten the payments due to you by your customers so you can take care of your firm’s fixed and variables expenses with ease. Consider taking a working capital loan to bolster your business’s finances during lean periods.

Additional Read: How Digital Business Owners Can Find Success

How To Get Small Business Finance From Bajaj Finserv

Dos and Don’ts when applying for a Business Loan

Business loans from Bajaj Finserv are designed specially to help growing businesses meet their financial requirements. Easy to apply for and hassle-free to avail, these loans come with several unique benefits that make them the ideal mode of business finance for small and medium sized enterprises. However, when applying for a business loan, there are certain dos and don’ts that you should keep in mind, in order to ensure that your application is processed smoothly. Here, we tell you what they are.

Dos and Don’ts when applying for a Business Loan

4. Outsourcing vs. doing work in-house

Making this choice would vary from firm to firm and situation to situation. For example, an agency that is busy with designing the layout for several websites may need to hire a freelancer to get the work done by the agreed deadline. But, in this case, the project fee will have to be shared with the freelancer. On the other hand, the more work you are able to do in-house, the greater your firm’s margin of profits will be, as long as your team is getting burnt out. Hence, it is important to closely examine the situation before deciding on outsourcing work.

5. Managing business debt

Take debt wisely by keeping in mind that any debt is a liability for your business. Large amounts of debt can lead to a business becoming insolvent over time. To avoid this risk, it is important to closely keep track of debts and repay them as soon as possible. Take some time to choose whether you want a secured loan, which puts your business assets at stake, or an unsecured loan which is free of collateral. Also, pick your repayment tenor wisely, accounting for when your business is likely to get the revenue, which can help you pay it off in a timely manner.
As you keep an eye on the factors above and improve your internal processes for increased efficiency, also keep an eye on working capital, funds for growth and finances for purchasing machinery and raw material. Organising your finances for today is one thing, but anticipating future needs correctly is even more essential.

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