2024 was something of a roller coaster for many business owners, wondering how to grow a small business amidst the numerous financial difficulties. Economic uncertainty, rising overheads, (impending) tax increases for employers and worldwide political instability created challenges that required proactive financial management.
As a business owner, you’re juggling countless priorities, but with the right focus, 2025 can be a year of resilience, growth, and opportunity.
6 Financial Tips to help grow your small business
Want to learn how to grow a small business? We’ve outlined our top 6 tips to help you kick off with a strong start!
Do your research
As a small business owner, you’re aware of how important research is for your success; research your target market, research your competitors and then research their marketing strategies and success rates.
But don’t overlook the financial aspects of research when planning how to grow a small business!
Researching, understanding and reacting to the costs of staff, equipment, services, marketing strategies and projected gross income against the projected expenses of your services or products (and their potential ROI) is the type of research that builds a winning and informed strategy. This key-metric research is the primary way that we -at Palmers- provide business owners with specific strategies to win and grow their small business.
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Learn how to grow a small business in this walkthrough with Clare, as she explains how analysis of key business drivers highlights business goals and creates strategy for the coming year!
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Go with the Cash Flow – Cash is King:
Neglecting your cash flow is a recipe for disaster. If you don’t collect enough money from sales to cover your bills, then you’re going to have a cash flow problem. It’s as simple as that and a problem that even the most profitable companies face from time to time.
Late payments, unexpected expenses, and poor inventory management can quickly drain your resources. If you don’t already have them, make a resolution to implement robust cash flow forecasting and monitoring systems.
For a small business, chasing debts can be an awkward conversation so it’s important to have clear processes that allow you to collect debts without souring your customer relationships.
This starts with good bookkeeping, so you always know exactly what you’re owed but also includes:
- Send invoices early
- Conduct credit checks
- Chase invoices early
- Agree clear payment terms and plans
- Adopt cash collection tools such as GoCardless or direct debit for monthly recurring payments.
Software such as Xero can help you optimise your business finance processes and workflow.
For more tips on how to improve your net cash flow, check out our article: 10 ways to improve your net cash flow.
Build your Business Blueprint
I’m not sure who said it BUT it’s so true, it’s worth repeating, ‘if you fail to plan, you’re planning to fail’. A key aspect in knowing how to grow a small business is planning the growth strategy!
Operating without a clear financial plan is like navigating without a map. Develop a comprehensive budget that aligns with your business goals. Remember to track your progress regularly, against your goals, so that you can identify winning -or failing- strategies and react to them quickly .
Learn how to measure your metrics and maximise annual profits in our FREE 15 Minute Video.
A key part of your business blueprint is building sustainability through recurring revenue streams. As accountants, we love recurring revenue streams because businesses continually have money coming in from the same customers, which gives you more secure cash flow, more accurate sales forecasting, improved customer retention and an enhanced ability to scale, profitably.
Often, we see business owners become overwhelmed by the planning process but it really doesn’t have to be onerous.
As with effective Cash Flow management, planning starts with good bookkeeping. If you don’t already do so, set up one of the industry standard cloud accounting tools to structure your profit and loss statement, not only will it save you time but they include a variety of budgeting tools to help structure your business plan.
Measure What Matters and Refine as You Go:
Don’t get caught up in chasing impressive-sounding numbers that don’t translate to real profitability.
When planning how to grow a small business, it’s important to focus on metrics that truly matter to your bottom line. Set specific, measurable, achievable, relevant, and time-bound (SMART) financial goals. This must include targets to improve your profitability and balance sheet as well as growing your turnover.
One of these fundamental measures is gross margin, both in percentage and absolute terms. Once you know your overall gross margin, break it down by product or service line, projects, channel, geography, as much detail as you can because this will inform your marketing, sales and product / service development plan moving forwards, throughout the year.
In periods as little as three months, it is possible to measure what is working and what could be further refined, in order to maximise profits within the year. For this reason, it is essential to regularly assess spending, investments, costs, strategies and their outcomes.
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Enjoy a walkthrough of some of our process with Clare, as she explains how metrics analysis of key business drivers highlights business goals and creates strategy for the coming year!
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Increase Customer Retention – Leveraging Existing Customers:
Very few businesses only sell one product or service, so review your existing customer relationships and see if you can encourage them to spend more with you. New clients are normally more expensive to service, so this is an easy way of increasing your turnover, through up-sell and cross-sell, increasing average spend per client and profitability.
Don’t neglect your financial data in this process, it holds a wealth of customer insights that you can uncover to drive success and grow your business. Not all customers fit your business model, and yet very few businesses actually categorise their customers.
Often start-ups end up engaging with any customer that will pay the bills but there comes a stage in any business where it’s important to review what sort of customers you’re dealing with. What’s important here is to analyse your customers.
- How large is the customer?
- How active are they?
- Do they purchase once a year or every month?
- Do they buy just one thing from you, or do they buy several things from you?
- To what extent do they refer new customers to you?
- How easy are they to deal with?
- How profitable are they as a customer?
Not all these criteria may be equal, so you might want to weight those criteria. Once you’ve gone through that process, you will essentially rank your customers by value to your business, delivering a greater understanding of your customers behaviour, so you can make better informed decisions.
Drive Efficiencies by Streamlining Your Operations:
As business owners, it’s critical that we consider what tools will enable our businesses to scale and to do so smoothly without creating complexity, or worse, negatively impacting our customer experience.
Streamline your financial processes with cloud-based software. Automate invoicing, payment processing, and expense tracking to save time and reduce errors.
Regularly review your financial processes and systems to identify areas for improvement.
Advanced technologies like AI and cloud computing provide powerful tools to streamline operations, reduce costs and deliver the flexibility to scale at pace but being agile doesn’t mean adopting every new tech trend either.
Stay informed about new technologies and best practices and when you decide to invest, it’s important to measure how much you are investing and what that investment is delivering.
If you’ve found these ideas helpful and would like to learn more on how to grow a small business, join our mailing list now for exclusive access to our 15-minute FREE TRAINING VIDEO, showing you how to grow your small business in 2025.
