What can you do to avoid money worries?

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Main money worries for SMEs

Money is obviously a crucial commodity for businesses of all sizes, but it often seems to matter most when it is in short supply. After all, how can SME owners with limited funds hope to grow their business and generate extra cash if they don't have the resources with which to do so?

It's therefore not a surprise to learn that money worries are keeping many small business leaders up at night. But the actual extent of the problem is rather worrying. 

According to research by KPMG, 53 per cent of small business leaders routinely suffer from sleep deprivation because of finance-related concerns.

Some 46.5 per cent said money worries get in the way of a good night's sleep either more than once a month or more than once a week.

So what specific issues are causing so much angst and stopping small business leaders from dropping off soundly at night?

According to the KPMG study, there are five overriding financial issues on their minds.

  • Managing cash flow
  • Being as tax-efficient as they can
  • Understanding how profitable their business is
  • Lacking up-to-date information on their business performance
  • Raising funds to invest in growth

So what have business leaders done to overcome these problems and give themselves some peace of mind? Could you adopt similar approaches to help you sleep at night and run a more solvent business?

Embrace technology

Paper-based accounting is unnecessary in this day and age, given the breadth of accounting software that's currently available.

You can view your accounts in real-time so you can get a much more accurate idea of your financial situation at any moment than you would with physical documents.

You can even download apps to scan receipts, you don't need to manually log every single one when you're trying to process expense claims and invoices.

Of course, you might be worried about whether the IT equipment you have has the processing power to cope with the latest accounting software - and if it doesn't, the cost of upgrading can be prohibitively high. 

Leasing IT equipment rather than purchasing it outright could therefore be a good option, as it makes it easier for you to upgrade to the latest devices at a relatively modest cost.

Store data in the cloud

Many digital accounting systems are based in the cloud, which means data can be stored off-site, rather than on a server in your premises. 

This has a large number of benefits, such as taking away the need for you to purchase and maintain an internal data server, and making your data accessible to any authorised person, regardless of whether or not they are in the office. 

A further advantage of cloud-based accounting is that your data is more resilient in the event of a catastrophe. If your premises falls victim to theft, fire or flooding, paper-based documents could be irreparably damaged, but if your accounting data is stored in the cloud, this risk is taken away and it's easier for you to resume trading quickly even in such dire circumstances.

Update your internal processes

Many financial concerns can arise out of the fact that you simply don't have the right processes in place. For instance, if you only have an idea of your profitability at the end of the financial year, it might be time to switch to a system that lets you keep track at all times.

Alternatively, make sure everyone knows what the expenses system is and that they're sticking to it at all times, so it's less laborious chasing people up and searching for invoices when time is short.

At the same time, why not see where wider operational processes can be improved? Are you spending money as efficiently as you could be? Could you get better returns on investment by switching to different suppliers or targeting your marketing campaigns more effectively? There are countless areas where you'll find savings can be made and stronger returns can be generated.

Speak to an expert

Small business leaders can be prone to doing everything themselves, but when it comes to managing the finances, it really pays to bring in a second opinion so you can get peace of mind.
There are many options open to you, from asking your current accountant to take on more duties, or even hiring a part-time or full-time financial director to keep an eye on the books.

Both would be ideally placed to flag up any potential issues as and when they arise, so you can be proactive in dealing with them.

The KPMG report lifts the lid somewhat on how all-consuming running a small or medium-sized business can be.

It's therefore good to see that many of those in charge are taking decisive and positive steps to make it easier for themselves.

Identifying problems early is crucial in order to nip them in the bud and prevent them becoming bigger issues later on, both for your business and for you personally.