October 7, 2020
Access to finance has been one of the major challenges continuously mentioned by micro, small and medium scale entrepreneurs. However, building a successful business doesn’t necessarily mean pumping in fresh capital every time, rather it is about being intentional about how the financial and human resources available to you are properly managed.
Beyond sourcing for loan, credits and other financing options, here are some strategies you should consider in order to help your business grow and also attract funders like FCMB.
- Separate your Business Accounts from your Personal Accounts
Many small business owners often make the mistake of mixing their personal funds with their business funds. This is often because most businesses started as a side hustle and the document required to set up a corporate account such as a certificate of incorporation is unavailable.
As an entrepreneur seeking business growth, it is important to separate your business account from your personal accounts. With this, you can better ascertain how much you earn within a period and the expenses incurred. In addition, it would be helpful at the point of seeking funds from lenders who often request for bank statements to project your cash flow and determine your capability to pay back.
- Have a Budget
Budgets are essential tools that enable individuals, businesses and governments plan ahead in order to avoid financial problems. With a budget, you can project your earnings and expenses accordingly and make more informed decisions about how to move your business forward, while avoiding frivolous spending.
For instance, if you know the limit you should spend on marketing is a certain amount, you will be able to strategically determine the best marketing channels or tools needed to drive sales. Similarly, variations between your budget and actuals gives you insight into what you did or can do differently to boost your financial position.
3.Explore Barter Opportunities
Bartering is one of the oldest forms of doing business and it can still be explored today. It is simply the exchange of goods and services between businesses without monetary consideration. For instance, you can offer your professional expertise as an accountant in return for advertising opportunities on a media platform. Similarly, if you are a fashion designer, you can make wears for a brand influencer in return for a mention or promotion of your brand.
Most importantly, ensure that what you are offering is equal or of great value to what you are requesting, while your proposed business partner is also willing to explore such opportunity. You should also ensure you properly account for the services rendered and received, as they would also form part of your financial records.
4.Comply with Regulatory Requirements from the very beginning
Complying with the regulations and policies within your industry is essential. Though they may appear insignificant, however, as a small business owner, it is important to have a compliance checklist in order to ensure you meet the minimum requirements to operate.
Some of the common regulatory requirements that you should not ignore are payment of taxes, licenses or permits related to your business e.g. NAFDAC Registration and pension for your employees (if you have three or more employees).
Non-compliance with rules and regulations can cost you more in future or affect the sustainability of your business, especially when they become legacy debts. Thus, it is important to build in compliance into your business from the very beginning because ignorance won’t be an excuse.
5.Work with professionals that understand the nature of your business
Often times, small business owners hire professionals that do not understand the nature of their business. All in the name of trying to cut cost or wanting to do business with a friend or relative. It is important to know that this can be detrimental and more expensive in future. For instance, an accountant with expertise in preparing financial statements for an oil and gas firm may not have the required experience needed to prepare a financial statement for an insurance company. Thus, it is important you engage professionals with a track record related to your business type.
In all, hire a professional that understands your business needs and structure a payment plan you can afford, as doing this would save you the cost of spending more to get things done accurately in future. There are various platforms that have service providers listed at affordable prices that you can patronise. One of such is the FCMB Business Zone which has various communities that can connect you with SMEs in your industry.