Embarking on the journey of entrepreneurship can be overwhelming, especially when it comes to managing your finances. The complexities and uncertainties of the business world can often lead to confusion and stress. However, small business consulting services offer the much-needed clarity amidst the chaos. Nearly 40% of small businesses leverage these services to streamline their operations and receive expert guidance on crucial financial decisions.
Would you like to join this growing percentage and transform your business? Embee NextGen can help. Discover the benefits of professional advice and learn how to bring clarity to your financial management.
This article will explore how small business consulting can help you achieve your goals with confidence and precision.
The Financial Challenges of Small Businesses
Keeping a small business going requires significant effort to battle the challenges involved. Young entrepreneurs need to endure a great deal of pressure. Some studies even state that only 80% of the companies make it through year one, only 70% make it through the second year, and just half stay strong during the five-year mark. These figures may seem shocking but can be attributed to a few financial and operational obstacles the companies may face. Below are a few prominent ones
Maintaining Cash Flow
Maintaining a good cash flow is a major concern that small businesses usually encounter. From efficiently invoicing to ensuring monthly expenses are met to saving cash for growth investments, liquidity remains a continuous challenge.
Budget Planning
A budget should not be underestimated. It is an insight into your company’s needs. Maintaining a good budget plan that works according to your organization is key to not letting your business wind up in debt. To keep your ship from sinking, consistently revise your budget to align with current conditions and utilize it to make sound business decisions.
Not Anticipating Unforeseen Expenses
Unexpected costs can disrupt even the most carefully crafted plans of small business finances. Maintaining a separate account for a ‘rainy-day’ fund provides a cash reserve to navigate difficult periods or seize growth opportunities when they arise. A key benefit of this fund is its potential to reduce reliance on debt, thereby lowering interest expenses.
Unable to Raise Capital
One in five business owners who sought funding in the past five years were denied, and 82% of surveyed owners couldn’t interpret their business credit scores. The same study also reveals that those with a better grasp of their credit scores are 41% more likely to secure a loan. Lack of working capital poses challenges for businesses of all sizes, but it’s particularly harmful to smaller entities with limited resources. While having enough cash to cover monthly expenses is beneficial, insufficient capital can hinder a small business from hiring, expanding into new markets, and exploring new opportunities.
Delayed Bill Payments
Suppliers, landlords, and utilities expect timely payments. While an occasional late payment might be excused, habitual lateness can significantly harm a small business. This can result in damaged relationships with suppliers, disruption of essential services, and ongoing debt issues, all of which can severely impact a company’s financial stability. Approximately 55% of businesses still manage their accounts payable (AP) processes manually, which is time-consuming and susceptible to fraud and errors.
These obstacles are just the tip of the iceberg. There are more obstacles out there. Small businesses are slowly moving to consultancy firms that can help their business survive the unexpected challenges.
What is Small Business Consulting And How It Can Help Transform Finances
Small business consulting provides entrepreneurs with the expertise needed to tackle various business challenges, particularly in managing business finances. Today, many small business owners are leveraging the knowledge of consulting firms to transform their ventures into success stories.
These consultancies employ specialists in accounting, financial advice, bookkeeping, human resources, management, marketing, and public relations. These professionals offer practical, tailored advice to help clients overcome obstacles and achieve their business goals.
How It Can Help Transform Finances
They have multiple services under their belt, one of which is finance. Here are a few ways through which these consultants can help you with financial transformation-
- Financial Planning and Management: A small business consultant can assist in creating a strong financial strategy and budget, offering a clear path to reach your financial objectives. They can also aid in managing cash flow, ensuring you have enough resources to support both day-to-day operations and future growth needs.
- Profitability and Cash Flow: By examining your business’s financial health, a financial consultant can pinpoint areas to cut costs and boost revenue. Every business has its vulnerabilities, and a professional advisor can identify and address these weaknesses to enhance financial performance.
- Assist in Tax Planning and Compliance: A small business consultant can guide you through complex tax laws, ensuring compliance while optimizing tax-saving opportunities. Effective tax planning is crucial for maximizing your hard-earned money by minimizing unnecessary tax expenditures.
- Reduce risks: A consultant can help identify and reduce financial risks, such as fraud and embezzlement. They can also help create a contingency plan to ensure business continuity during unforeseen events. In uncertain times, prioritizing financial security is essential, and an efficient team of advisors plays a crucial role in achieving this.
How to Get a Consultant
Deciding to hire a consultancy service can be a significant step toward enhancing your business’s success. But how do you find the perfect fit for your needs? Here are some steps to guide you:
Identify Your Needs
Every business is unique, and so are its challenges. To find the right consultancy, you must first identify your core problems. Consultancy firms often specialize in specific areas such as human resources, public relations, financial planning, or accounting. Understand your business’s primary issues and seek out experts who specialize in those areas. Some firms may offer comprehensive solutions across various domains, providing a one-stop-shop for your consulting needs.
Determine Your Budget
Next, establish your budget and consider the duration and frequency of the consultant’s assistance. Decide whether the consultant can work remotely or needs to be on-site. This information is crucial for matching a consultant’s availability and preferences. Some consultants prefer short-term projects, while others are open to long-term engagements. Having a clear budget helps streamline your search.
Start Your Research
With a clear understanding of your needs and budget, begin researching potential consultants. Look for firms or individuals who have a track record in your industry and area of need. Utilize online resources, industry networks, and referrals to create a list of potential candidates. Ensure their expertise aligns with your business’s requirements.
Check Their Credibility
Once you have a shortlist, evaluate the credibility of each consultant. Review their resume, focusing on education, certifications, achievements, and types of projects handled. Seek testimonials from past clients to gauge their performance and satisfaction levels. Additionally, request a portfolio or examples of their work, such as articles, podcasts, or presentations, to understand the quality and type of information they provide.
By following these steps, you can find a consultant who not only understands your business needs but also brings the expertise required to drive your business toward success.
Conclusion
If you are facing troubles with your small business, hiring a professional small business consulting service will not only help sort out your financial troubles but also help you deal with operational issues. These firms can assist in managing your cash flows, crafting a strong budget, and keeping up with your taxes, easing the burden on your shoulders as an entrepreneur.
If you are also looking to transform your small business, partner with Embee NextGen and let us help you deal with accounts, bookkeeping, and much more!