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How to Maintain the Financial Health of Your Small Business | XL Financial Blog

How to Maintain the Financial Health of Your Small Business

Posted on 10. Nov, 2015 by in Budgeting, Business, Financial Planning

Small businesses help keep the American economy thriving and vibrant. Unfortunately, owners of these businesses may lack the financial know-how to remain solvent and avoid certain common money-related pitfalls. Tips that can help keep your small company financially solvent include:

Making Sure You Have Cash On Hand at the Beginning

The owners of new businesses often do not see any profits for a considerable amount of time after launch. Even if you turn a profit relatively quickly, you will want cash available to pay your quarterly tax bill. You can meet your tax requirements and avoid any potential short-term cash flow problems by stockpiling enough resources to meet your financial needs for roughly half a year. 

Keep Your Startup Costs Low

Some small business owners seek to make a flashy first impression by doing such things as renting lots of office space or spending lots of money on developing ideal versions of their products. These tactics may quickly lead to a rapid drop in available resources. As a rule, it makes more sense to keep your startup costs to a manageable level, then make more elaborate plans when you have the monetary muscle to fully carry them out.

Consider Taking Out a Loan

In the aftermath of the Great Recession, banks across the U.S. are showing an increasing willingness to lend money to small companies again. You might want to consider taking advantage of this new openness if you want to establish an emergency line of credit, refinance any outstanding debt or expand your operations.

Remain Proactive in Finance Management

Some owners only try to manage their small business finances two or three times a year. However, serious issues can develop quickly, and successful proprietors typically review their fiscal situation at least once a month. That way, unpleasant surprises do not pop up out of nowhere and ruin long-term plans, or even a small company’s basic ability to remain financially viable.

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