Put your money to work for your business.
Here’s some good news: the Bank of Canada didn’t raise interest rates this month. We’re also starting to see residential rates come down. Both of these things are encouraging for people and businesses who’ve been feeling the effects of inflation.
Speaking of businesses, here are four ways that you can keep your finances lean and agile for your company:
1. Cut out the extra costs
Are there items in your business that could save you money? If you’re feeling tight for cash, here are a few that can help:
- Purchase used instead of new equipment
Are there any places where you can get used equipment? This often comes at a cheaper cost, which can cut back on expenses.
- Sell old equipment that is no longer being used
If you’re not using a piece of equipment, sell it to someone who is looking to buy used. You probably won’t get full price back, but a little bit more cash flow can be helpful (and it won’t keep taking up space).
- Reduce inventory
When you have a lot of inventory, you’re paying for it all upfront— even if people aren’t buying it. If you’re seeing a slower period or want to save, cut back on your inventory orders until demand goes up again.
- Eliminate the middleman
If you’re spending a lot of money on things like shipping, see if there’s a way that you can eliminate the middleman. Can you pay a driver to do your deliveries instead of a separate company?
2. Invest any extra money
In an ideal world (whatever that looks like), you want to have about three months' worth of expenses saved in an emergency fund. When you do have an emergency fund, it’s a good idea to invest this money, so that it’ll grow while you’re not using it. If this is all brand new to you, check out this post about investing in your business.
If you’re in the position to put a little bit extra away for your emergency fund or future business expenses, now is the time. Interest rates are the highest we’ve seen in the last decade, which hurts your pockets but helps your savings. Money that you invest right now will grow for you, giving you more to work with if you’re hit with an emergency.
Anything that you’re able to put aside will help if an emergency does happen. That being said, if you’re not in the position to save right now, that’s okay too.
3. Get clear on your plan
Remember back during the height of the pandemic when wood all of a sudden became super expensive? Or when that ship got stuck and messed up the supply chain? Who could’ve seen that coming?
It’s always a good idea to look at your finances and the year ahead. What is coming up for your business this year? For example, if you took out a CEBA loan during the pandemic, those are coming due for repayment at the end of 2023.
If you’re planning to change something in your business—like expanding, hiring more staff or adding a new service—it’s a good idea to get clear on what costs might pop up (Psst, see number four for help on this one).
4. Talk to a connectFirst business advisor
We saved the best for last: talk to your business advisor at connectFirst. Banking is personal and each business is different, which means that the best way to get support is to talk to someone who understands you and your business.
Connect with us.
Our advisors can help you with anything from managing your loans or investing, to helping you to make decisions about expansion, payroll, employees and more. Book an appointment today.