In the face of rising inflation and the ongoing struggle to hire qualified personnel, many small businesses find themselves struggling to stay afloat. In September 2023, the National Federation of Independent Business reported that optimism among small businesses has declined, with 40% of small business owners saying they couldn’t fill job openings. Meanwhile, American consumers face a number of economic obstacles, from dwindling savings accounts to another expected interest rate hike, which affects their spending power.
Small business owners, eager to overcome these challenges, are driven by the need to capitalize on strong consumer spending. However, by delving into key areas such as understanding appropriate automation strategies or exploring government grants, this guide empowers entrepreneurs to fortify the financial foundations of their ventures beyond relying on just sales.
Harnessing marketing automation tools
There is a growing interest among small businesses in using AI and automation, with more than one-quarter of respondents expecting these technologies to save them at least $5,000 over the next 12 months. In fact, 70% of small businesses in a survey by marketing and automation platform Constant Contact have expressed willingness to pay more for a marketing platform that provides access to these tools.
The statistics show promising outcomes. 60% of small businesses using these marketing tools report saving time and working more efficiently, whereas 33% estimate they have saved more than 40 minutes per week on marketing by using AI or automation. These show that embracing automation, starting with your marketing strategies, not only streamlines processes but also positions businesses for success in a competitive market.
Automating your subscription model
For small businesses with limited capital and expenditure, efficient billing and revenue management in your finance department are crucial. Once again, automation plays a crucial role here. This minimizes the risk of late or missed payments and reduces administrative overhead, allowing entrepreneurs to concentrate on core business operations.
It’s best to choose software that can integrate with existing systems and implement various billing models. The cloud-based SaaS solution of subscription billing software Softrax ensures scalability and cost predictability, streamlining billing services and also contributing to customer retention by minimizing errors that can lead to cancellations. Small businesses, especially those with subscription models relying on steady cash flow, can even maximize this software to ensure financial records’ uniformity and prevent mistakes in accounting standards.
Understanding how to pay yourself appropriately
Many small business founders struggle with determining their take-home pay, and surprisingly, up to one-quarter of them, especially new entrepreneurs, don’t pay themselves as they do their employees. While paying yourself more might sound counter-intuitive, there’s a good reason for doing this. According to Zahir Khoja, chief executive at money management tools provider Wave Financial, this reveals a critical mistake that adds financial stress and can negatively impact proper business decision-making in the long run.
Instead, founders need to consider their total financial situation, including revenue, expenses, taxes, personal circumstances, and financial obligations. A thorough evaluation of these factors helps in making a realistic determination of how much they can afford to pay themselves without compromising the business. The goal should be to establish a sustainable pay that covers basic expenses and gradually increases as the business grows.
Applying for government or federal grants
The shortage of capital is a significant challenge for many small businesses. That is why the government has established various grant programs to provide financial support. Many of these come without the need for repayment, making them a valuable resource for business owners.
Business owners should explore the types of grants available, as listed in our previous article on The Benefits of Government Grants. This can range from the Community Development Block Grants for businesses in low- to moderate-income areas to the Environmental Protection Agency (EPA) Grants for companies in support of initiatives that conserve the environment. Eligibility criteria vary, but generally, small enterprises can benefit from these programs to foster growth and competitiveness.
While prospects may look bleak initially, small businesses can navigate financial challenges by adopting strategic approaches to revenue management. By implementing these tips, small business owners can enhance their financial resilience and position their ventures for long-term success.
