Financial Strategies for Medium Sized Companies
An important part of any business plan and strategy is the financial aspect, especially for medium enterprises, the cash flow represents the base of healthy growing. The financial department has to ensure the resources for a company to grow, and this can only be done by managing cash and other financial resources smartly.
Don’t be too optimistic with your expectations. It is possible for your company to grow the next year, but if you estimate a growth of 20% in terms of business volume, don’t estimate profits of 20% bigger. 10% is decent, and if by any chance the profits are bigger than expected, then you have some money put aside, which can be used for investments, or integrated in the rolling capital of the company.
A good accountant makes the difference. If you give two different accountants the same numbers, the inexperienced one might get you on loses, while the experienced one might obtain some significant profits, without using illegal accounting methods. Fore example, unused stocks can be considered as current generating expenses assets, so they would be passive actives for a beginner, while an experienced accountant could easily write those as long terms investments, which mean active assets that bring profits. This is why you should invest in good accounting, as this way, your long term previsions would be more accurate, and you will pay less taxes to the government.
Invest in Human Resources
The payroll represents a delicate problem for a medium company, especially if we are talking about a new company that has just reached the breakeven point. It is really hard to invest in training, new personnel and experienced employees as long as you still have problems with stocks and delivery, but you should make the financial effort to invest in people. Those results are not seen immediately, but on the long term, you will realize that this is the most important growth resource of a company.
Try to have rollover
Some managers refuse to take projects if they don’t bring huge profits. However, as long as you still have resources, why would you leave those unused? Unused resources generate expenses, and if you work with a client that does not offer so much profits now, you might get that client for a long time, and you never know when he would become your most important one. Even if there are small profits, it is better to have projects instead of paying your employees not to do anything.
Any extra sum that is recorded in your accountancy has to be used for investments. It is hard not to mark some profits now, to visit some exotic countries, and to take a break from working. After all, you have worked for years to see this business growing, and maybe it is time to see some rewards. On the other hand, maybe it is time to wait a little longer until your business is really solid, and until it represents something important on the market. This is why, for the first three years of the life of a company, all the profits should be used for investments. Once your firm has activity and experience on the market, it will attract new investors, and after, you can think about enjoying your vacations.