We list simple ways for small companies to stabilise their finances and aim to hit the big leagues.
Most small companies in India struggle in the initial years of operation. However, while a few survive and even thrive in the later years, many others quietly fold up.
Why do so many start-ups fold instead of going on to become successful business entities? The answer often lies in doing little things wrong. Consider 5 ways to stabilise your revenues and become successful in the long run:
- Get funding from the right channels. Many small companies’ founders begin operations using their own savings. But using personal assets to fund the business at later stages is not ideal. The business will require funding at various stages, and this can come via SME banking channels set up by your bank. These include loans for expansion, pitching for new business, trading with other geographical territories, forex, etc.
- Be careful about receivables and payables management. Your company’s performance can be hampered by a lack of revenues. This is often down to a disconnect between payables and receivables, rather than an actual dearth of business. You can entrust the essential SME banking function of receivables and payable management to your bank. It deals with checking your current accounts and investments, keeping track of vendor and supplier payments, client invoicing, collecting payments, etc.
- Be prompt about tax payments and returns. Small companies must be especially careful about timely tax return filing. Every company in India must file monthly challans and pay GST as per its monthly earnings. Paying taxes promptly and having all the paperwork to show for it is a good practice that helps companies secure funding for future projects.
- Curb wasteful expenditure. Small companies can hardly afford to waste any revenues in areas that are a drain on the resources. For instance, if the company can work with a staff of 5, then the remainder should be laid off to save on salaries. Similarly, if you find that a rental office space is more affordable than buying an office, then opt for the former option. Also, keep tabs on daily expenditure on stationery, pantry supplies, power usage, etc. These areas of expense can be sufficiently curtailed to save costs.
- Don’t be afraid to aim high. Many small company owners are too afraid of pitching for big business because they are hampered by a lack of funding and manpower. But unless you aim high, you will not be able to rise above the current financial situation you are in. If your revenues are regular, you can explore suitable SME banking options to raise funds to pitch for a big project or ally with a larger company as a sub-contractor. Meanwhile, you can hire manpower on a paid commission basis so that you don’t need to hire a full time team.