Small Business Tips To Reduce Financial Risk

Despite today’s interest rate cut, nobody is looking to the New Year with huge confidence and small businesses may be looking to tighten belts.  It’s timely then that Bibby Financial Services should release five tips to help SMEs reduce economic risks.

Here are Bibby’s tips:

Reduce your operating costs – carry out a full review of where your business spends its money. Can you cut back on any expenses without having a negative effect on profits?

Talk to suppliers – are you paying too much for supplies? Ask for discounts or better rates especially if you are purchasing large volumes of goods on a regular basis.

Buy in bulk – consider buying in bulk at a cheaper per unit price. This can help increase profit margins, although it will require committing larger amounts of cash up front.

Ask the experts – seek external expert advice from an independent source. But remember to choose carefully – it is imperative that you select someone who appreciates your needs and understands which direction you want the business to go in. Advice from a third party can also act as a ‘sense check’ and stop any rash decisions being made.

Consider finance options – in the short term, bank loans and overdrafts can be useful sources of finance, but the latter can be withdrawn at short notice, leaving a funding gap. Consider other flexible sources of finance, such as invoice finance, although this can be an expensive way to borrow.

Involve funders from the outset – involving your funders in the planning process means you can work together to ensure the right deal at the right price.

Communicate– once funds are successfully secured and borrowed, invite the lenders to see how their money has been used.  This generates confidence and trust, making future requests for funding a much smoother process.