Dear business owners,

Do you ever worry about your company’s financial position?

Do you find yourself scrambling at the end of each month, trying to balance revenue with expenses, or wondering how you can improve cash flow and increase your business’s financial strength? If that sounds like you, you’re not alone.

The good news? It doesn’t have to stay this way anymore. By focusing on key areas like cutting costs, managing debt, and boosting revenue, you can transform your business’s financial performance and position yourself for sustainable growth.

Let’s explore five proven strategies that will help you fortify your business's financial backbone, drawing insights from some of the world’s leading financial experts.

Are you ready? Let's dive in!

1. Cut Costs Without Compromising Quality

Let’s start with an easy win: cutting costs. But before you think about cutting corners, slashing salaries, or shrinking your team — hold on! Cutting costs doesn’t have to mean cutting value.

Think about this:How do some businesses manage to grow while keeping expenses low? Take a page from the book “Lean Thinking” by James Womack, which teaches us that businesses should focus on reducing waste, not value. Conducting a cost audit can help you spot areas where you’re overspending.
Here are a few easy ways:

• Outsource non-core activities: Hiring in-house for every little task can drain your resources. Consider outsourcing things like customer service or IT.
• Reduce energy usage: Small changes like using energy-efficient lights can significantly lower costs over time.

Consider an imaginary example: A Nepalese tech startup saved 20% in operational costs by outsourcing its support team while keeping product development in-house. Just think of the growth opportunities if you reinvested those savings back into your business!

But wait, “what If I owe a debt?” Well, there’s a solution for that as well.

2. Manage Debt Like a Pro

Debt isn't necessarily a bad thing.Sounds strange, right? But it’s true.

Taking on debt can actually help your business grow if you know how to manage it well. The key is to make sure the debt you take on is helping to increase your revenue.

In his classic book "The Intelligent Investor", Benjamin Graham emphasizes that good debt helps businesses grow, while bad debt, characterized by high interest and no returns, drags them down.

But how can you manage the debt? Well, here are the ways:

• Refinance high-interest loans: This can save you a ton of interest over time, freeing up cash for more critical investments.
• Use debt for revenue-generating projects: Invest in areas like expanding your product line, increasing production, or entering new markets.

For example, a manufacturing company can refinance its loan and strategically borrow for an expansion that directly boosts sales. What could be the result? Revenue growth without a crippling debt load.

Now that you have learned how to manage your debt, let us find out how to increase revenue.

3. Increase Revenue: Play it Smart

It’s not all about saving; growing your revenue is equally, if not more important!
More money coming in means better financial strength for your business.

But here’s the trick — you need to think strategically. Simply raising prices isn’t the only way to increase revenue (and can backfire if not done right).

In “Blue Ocean Strategy”, the authors explain about creating new market spaces — or “Blue Oceans” — where competition is not so relevant. Diversify your product line, create new services, or enter markets where demand is high and competition is low.

Let us imagine an example, a Nepalese retail company can boost its revenue by 15% in one year by launching an e-commerce platform to cater to rural areas with limited access to retail stores.

Imagine discovering untapped opportunities in your own business! What’s your “Blue Ocean?”

But will managing the revenue alone work?

4. Improve Your Cash Flow

Did you know that more businesses fail due to cash flow problems than lack of revenue?

Yup, that’s right! You must know the fact that even very profitable companies might struggle if the cash flow isn’t managed properly.

As Robert Kiyosaki wisely points out in “Cash Flow Quadrant”, liquidity is key to keeping your business running smoothly. You could have a huge order coming in, but if there’s no cash in the bank to pay salaries or bills, it could all fall apart.

Here’s what you can do:

• Arrange installment terms: Work with your providers and clients to adjust installments with your cash stream cycles.
• Invoice financing: This lets you access cash quickly by selling your unpaid invoices to a financial institution for a small fee.

We can consider an imaginary example, a mid-sized construction company in Nepal negotiated a 30-day payment cycle with clients, dramatically improving cash flow and reducing late payments.

So that’s it? Isn’t that? Well, not really.

5. Invest in Financial Education

Applying all the above techniques requires much more effort than it seems. For that, financial education is very important.

How well do you and your team understand your company’s finances?

Not sure? No need to worry, you’re not the only one. But here’s the thing — financial literacy can make or break your business.

In “Rich Dad’s Increase Your Financial IQ”, Robert Kiyosaki emphasizes that understanding how money works, how to invest, and how to make data-driven decisions is crucial to running a successful business.

Quick tips:

• Educate your team: Get your employees familiar with basic financial concepts so that everyone understands how their decisions impact the company’s bottom line.
• Implement financial analytics: Use financial dashboards to track key performance indicators like net profit margin and return on assets (ROA).

Wrapping Up

So, there you have it — five ways to improve your business’s financial strength. Whether you’re a startup in Nepal or an established company in another country looking to optimize operations, these strategies can work wonders.

By focusing on cutting costs, managing debt, increasing revenue, improving cash flow, and educating your team, you’ll be positioning your business for long-term success.

Now, what’s stopping you from taking the first step today?

Green Tick Nepal offers a wide range of finance-related services like financial consulting, Tax Management, accounts and financial advisory. Contact us today!