The world of finance is complex, interrelated, and incredibly important. Developing a financial structure that works for your business is dependent on how your organization is structured, the kinds of products or services you sell, and your vision for the future. Whether you are relatively new to financing or have experience but want a little bit of help, here are ten things to think about along the way.
1. Create a Roadmap
Start by creating a roadmap that envisions your financial goals and what you will do to achieve them. This simple tool can be altered and updated to reflect the changes in your business structure or gains in revenue. With a clear path to where you want to be, you can make more confident and effective decisions.
2. Consider Funding Options
There is an incredible array of funding options you can choose from to build the structure of your business. Some of the most popular ones include the following:
- Credit Unions
- U.S. Small Business Administration (SBA)
- Friends and Relatives
- Mortgage Companies
- Local Financing Programs
- State Financing Programs
3. Decide Your Risk Level
Think carefully about the level of risk you are willing to assume. Come up with a comfort zone that you commit to operate in. Develop procedures that will direct decisions should something happen that causes you to operate outside of that comfort zone. Regularly assess your risk level, and make sure there are things being done to keep your finances secure and your business protected.
4. Invest in Insurance
Having a reliable insurance policy is an excellent consideration to make when building a financial structure. In the event you run into financial distress, a customized policy can help cover losses or give you the assistance you need to pay back debts and recover from periodical damage.
5. Hire the Right People
When looking to hire employees to run your finance department, consider individuals who are trustworthy and loyal. Select the candidates who have shown attention to detail, a profound understanding of successful financial strategy, and an ability to work well under pressure. With the right team of financial professionals, you have a much better chance at achieving and maintaining success for your business.
6. Maintain an Emergency Fund
You never know when times may get tough, consumer interests may change, or the economy may take a freefall. Look ahead into the future and identify areas where risk is highest. Build and maintain an emergency fund that can be accessed easily should financial distress ever occur. Make a commitment to never dip into those funds unless it is an actual emergency. Define what an emergency situation is, and be sure your finance department understands what circumstances warrant the need to utilize emergency funds.
7. Be Honorable
When the time comes for you to pay suppliers, partners, or other local organizations, be sure to do so honorably and efficiently. Doing so will build your reputation as a trustworthy and loyal person.
8. Keep Organized Records
Maintain organized records that include balance sheets, ledgers, spending receipts, and cash flow statements. These can be used for reference and are valuable tools to keep for the historical records of your business.
9. Be Flexible
On more than one occasion, you will find it necessary to change your original structure. Perhaps you need to adjust your portfolio, reduce investors, or consider other means of funding. Your flexibility will make it easier to change and less stressful to make decisions when things come up unexpectedly.
10. Restrict Financial Access
Monitor who has access to your business’s finances and restrict access to everyone else. Doing so will greatly reduce the potential of fraud and theft from occurring.
Developing the financial structure of your organization will take time and patience. By carefully considering these 10 things, you will have a more confident idea of how to tackle this important aspect of business.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.