Optimizing Your Budget: Practical Tips for Financial Success 

Smart money management is one of the most important skills a small business owner can master. When you’ve got a strong handle on your finances, you can see a clearer picture of your business’s health and make good choices to help it grow. 

At Walmart Business, we know financial management is often easier said than done. That’s why we’ve assembled a group of pros to share the insights they’ve gained over their years of experience in the webinar “Financial Planning Best Practices.” Check out some key takeaways below, and watch the full webinar here.

The experts

Ryan Ramirez, senior manager of business development at Walmart Business, hosts the discussion. Dr. Kimberly Lemke, a licensed clinical psychologist, sleep science coach and corporate speaker, shares her experience as a veteran small business owner. 

Margueritte Harlow, Square Banking’s head of product marketing, chimes in to share things she’s seen in her clients’ businesses. And Synthia Jaramillo, senior vice president of corporate relations at the U.S. Hispanic Chamber of Commerce, provides guidance and tips for new and growing organizations.

Cash flow and why it matters

Cash flow empowers every aspect of your business. 

At its most basic, cash flow measures how much money enters and leaves in a given period. Monitoring it can help you spot opportunities to adjust spending with an eye toward overall business health. 

For example, positive cash flow is a sign your business is sustaining itself. It lets you pay for expenses and potentially reinvest in growth. On the other hand, negative cash flow may indicate that you need to make some changes or that you’re in a financial lull.

So what leads to negative cash flow? Late-paying customers, for one. To keep payments timely, Dr. Lemke recommends ensuring payment terms and conditions are clear and agreed upon before taking on any work.

If you and your customers are on the same page from the very start, you’ll have an easier time enforcing deadlines. Incentivizing on-time payments and maintaining relationships with your customers can also help them pay on time. 

But at the end of the day, you may determine your time is better spent growing your business rather than hunting down invoices. Dr. Lemke says that hiring an outside billing agency has taken invoice management off her plate. That lets her focus on long-term growth instead of minute-to-minute survival.

How to control your costs

Every business owner knows it’s important to control costs, but it’s not always obvious how to do so. One way Dr. Lemke keeps costs down is by negotiating with vendors. That includes working with her landlord to keep rents reasonable. She also recommends using software to help track your costs over time and keeping your eyes open for new revenue opportunities. The model you start with may not be the one you use forever. 

For her part, Harlow reminds small businesses to keep taxes in mind throughout the year. Keeping a financial buffer in place can avoid cash flow problems come tax season. 

That buffer can also help mitigate the effects of inflation and other rising costs, allowing you to preserve your business’s core services in the face of those challenges. Dr. Lemke says it can be helpful to build relationships with other businesses in your community. If their costs are rising—and their prices along with them—she says you shouldn’t be afraid to raise your prices, too.

Funding: When, how and why explained

Jaramillo highlights two main use cases for external funding. The first is when you’re just starting your business and could use an injection of capital to get things going. 

The second is when you’ve identified a growth opportunity that your current funds can’t support. Moving into a new market? Expanding your operations to meet rising demand? Now might be a good time for funding.

However, as useful as external funding can be, Jaramillo says it’s not always the right answer. When you accept funding, you may cede some control over decision-making or dilute the stakes of existing shareholders.

New stakeholders may expect rapid growth, adding pressure to your business. And you’ll need to repay any loans you take plus interest, which can put a dent in your cash flow. Weighing these considerations is a critical step in the funding process. 

To be a good candidate for external funding, Jaramillo says a business should have a proven business model, a track record of success and a clear growth strategy. Additionally, funding is about building trust with investors. That’s why Jaramillo recommends being as transparent with potential investors as possible.

With the why and how covered, the panelists moved on to where to find funding. Harlow recommends banks as the traditional route, while Jaramillo says local chambers of commerce can also lend a hand. She also says to keep an eye out for groups focused on promoting certain kinds of businesses.

For example, the Hispanic Chamber of Commerce and its local chambers aim to aid Hispanic entrepreneurs with loans. You may be able to find similar organizations that want to help business owners with your background. 

Watch the full webinar

The free webinar, “Financial Planning Best Practices,” is full of actionable tidbits about keeping cash flow healthy, managing costs and the nuances of funding. Click here to watch the full webinar.