The efficient use of business funds is key to the success of any middle-market company. To support the business’s performance, take a bird’s eye view of your financial activity – including all revenue streams, expenditures, and capital reserves. By examining how each factor contributions to your overall financial picture, you’ll be in a better position to grow your revenue, optimize your operations, and implement long-term growth strategies.
Carefully review your revenue, operating costs, budget, and projections to look for ways to improve your financial performance. You can help ensure a healthy balance sheet and strong growth trajectory for your business by making practical improvements in these three areas:
Because revenue is the lifeblood of the business, it’s essential to understand how much you need to stay afloat, how much more you need to grow, and how you can enhance or add to your current revenue stream. Perform a break-even analysis to get a better picture of your business’s profitability, then review your revenue drivers to see where you can make improvements – such as by shifting sales priorities, adding or discontinuing products, entering new markets, or adjusting prices. If your strategy to boost revenue comes with a major upfront cost, follow these tips for securing the capital your business needs to grow.
When there is no short-term answer to the question of revenue growth, there are often ways to improve your near-term profitability by trimming labor and production costs. Because a business’s greatest recurring expenses are usually staff-related – such as salaries, payroll taxes, and benefits – reviewing the productivity and efficiency of your staff is the best place to begin. Consider increasing training to make your staff more versatile and productive or improving workflows for greater efficiency. You can also boost the effectiveness of your staff by investing in facility upgrades or equipping them with the latest technology.
Look at your budget and expenses to see where your funds are going, then think about how each area contributes – whether directly or indirectly – to your bottom line. If the costs associated with your facilities, equipment, marketing efforts, vendor relationships, vehicle fleet, or other budget items are disproportionately high, look for ways to get more value out of this expense or find ways to scale back (such as by selling underused company assets or finding less expensive alternatives). Follow these best practices for business operations to help eliminate waste and get more out of your operating budget.
Strong Financials, Long-Term Success
Making efficient use of business funds is crucial when times are lean, but it should remain a priority during periods of prosperity as well. Make sure your excess capital is put to the best use – such as through short- or long-term investments, carefully planned capital expenditures, or professional development for your staff.
By using these three strategies to boost efficiency and reduce waste, you can help ensure your business’s long-term financial health, increase stakeholder support, and help improve the performance and professional growth of employees.