Small to medium enterprises (SME) are the backbone of our economy.
As the name implies, they might be small but they outnumber large firms. They create more job opportunities in the economy. With the business and financial strategy that they use, they also open new ideas in terms of innovation and growth. Small to medium enterprises are better at adapting new trends and modern technology.
But there are times that financial constraints hinder the growth of small businesses. Unlike large enterprises which are more adaptive, a small business can take a direct hit with a sudden change in the economy.
Learning financial knowledge and strengthening financial relationships can help small businesses be more stable.
How?
Building Better Financial Relationships
For small to medium enterprises (SME) owners, understanding their financial status from the start is a must. You don’t want to ruin your efforts in starting your own business because of overspending or bad financial decisions.
In this case, building financial relationships is important. By having strong financial support, you can make wise decisions for your business and keep your finances rolling.
Here are different financial and business relationships that you will need to build as you expand your business.
- Financial advisor
A trustworthy financial advisor can help you with planning your short-term and long-term goals for your business. He can assist you in looking out for the best interest of your business’ financial health. A financial advisor can also give you advice regarding investments, tax and business insurance. Having a great financial relationship with them can safeguard that every financial decision you make for your business will be for its improvement.
- Accountant
A reliable accountant is essential in managing your financial records. For small businesses, their role is to collect financial data and generate reports. But for some medium-size businesses, they can act as an adviser and financial interpreter. They can also act as the business representative for outside gatherings. Make sure to build a financial relationship with someone who has a background with the same industry as your business since different business types also mean different financial needs.
- Mortgage Broker, Finance Broker and Lender
In growing your business, you might need to loan for additional capital. Having a strong business relationship with a broker or lender can make it easier for you to expand your business.
In most cases, brokers are the first on the lenders’ list. Small to medium enterprises (SME) owners know that choosing the right banking institution is critical for their business’ financial health. And building a strong financial relationship with them is the foundation for long-term business success.
You see? Creating business and financial relationships are an essential part of running a business. But growing a business is not a one-man job. In making your road to success, you will need support from various entities.
DougDurie.com is a small enterprise that creates amazing changes in business management and leadership.
Understanding Financial Knowledge
Many small business owners see themselves as lacking important financial knowledge. And this can impact the success of their business. Financial knowledge or literacy is defined as your ability to understand (1) how money works in your business, (2) how you make it, (3) how it is spent, and (4) how it is invested. Understanding this can, in fact, improve the financial status of any business.
Why should business owners care? There is a direct connection between financial knowledge and business success. Unlike large companies that can adjust their finances depending on the economic situation, small business owners should be one step ahead to protect their business from any unexpected events.
Gaining financial knowledge can speed up the growth and expansion of your business. This will affect your capability to gain more funds for business growth and your financial relationships to possible financial lenders.
The easiest way to gain financial knowledge is to start making your own library for finance. You can read and research powerful business books and get newspapers and magazines about finance.
Start learning the business language, and get your finances up-to-date. Have a cloud-based accounting software that is perfect for small business owners.
Remember, the numbers tell the story of your business so be sure to understand them. With a solid understanding of your financial records, you can make life-changing and strategic business decisions.
How Financial Knowledge Can Help Small and Medium Businesses
When you already have the basic financial knowledge, you can now use them for the growth of your business. Ready to get started on your journey to business success?
Here are ways financial knowledge can help with the success of your business.
- You take actions carefully.
Knowing the impact of your actions in the business’ financial health can help you with your decision making. When you understand your business’ financial situation, you can see what are the factors that are affecting it. And you can carefully take the necessary actions to change those factors for the betterment of the business.
- You make better decisions and judgements.
If your business is facing a difficult situation, you can confidently make decisions after understanding the financial implications of different options. Being knowledgeable in finance can help you become a better leader for your business, and in turn help you build more powerful business relationships too.
- You become financially efficient.
Knowing where your expenses go in your business can hone your skills in being more financially efficient. You can see if there are services that you used before that can now be removed. You might recognize a better tool for your business at a lower cost. When you know and understand each expense in your financial statement, it is easier for you to find ways to save more on cost.
- It can help your negotiating skills.
When you understand your business’ financial health and financial strategy, it will also be a great leverage when you are trying to get more financial support. Since the matter has a great impact on your business growth, understanding how to lay your cards on the table can improve your opportunity. Moreover, talking about the financial implications of your desired change can influence the conversation in your favour.
Gaining financial knowledge can be beneficial for anyone, no matter what your position in the business. Indeed, it is a vital factor for the success of any small to medium enterprises.
You have nothing to lose in increasing your financial knowledge. With Coach Doug Durie, he can assist you in using financial knowledge in your gain.
