3 Important Skills for Managing Your Business Finances

May 19, 2017
05_19_small biz finances

Managing business finances is one of the big challenges facing entrepreneurs. Your ability to survive and thrive as a business owner often depends on making sure you have the financing for day-to-day and long-term needs.

This takes skills that you undoubtedly already have and are using in building your business. Learn more below about how your communication, confidence and proactive mindset can serve you well in your lending relationship.

1.    Communication

You use this skill every day in running your business. You delegate tasks to your employees, listen to your customers’ concerns, and promote your business in creative and efficient ways.

You’ve seen how much of a difference communication makes, especially when it’s timely, quick, and clear. You may use many different tools: email, phone calls, in-person meetings, Slack, or social media. Whatever tools you use, you always prioritize effective communication in all its forms.

The same skill can help you succeed in securing financing for your business.

When you work with a funding partner, it’s important to put your best foot forward by providing helpful information. Sometimes that means uploading a requested document or adding your secure, read-only bank connection. Sometimes it means working with your account manager to make sure you clearly communicate the questions you have.

In addition to providing information, an effective communicator is also skilled at listening and interpreting information. It certainly helps if your financing partner is a good communicator!

Successful clients use the resources at hand to understand their account events and keep an eye out for communication from their dedicated account managers.

When you know you have all the information, you’re able to feel confident about integrating your lending partner into your everyday business practices instead of worrying about the unknown!

2. Confidence and preparedness

As an entrepreneur, you need confidence in the mission of your business. Your dedication to your customers and your desire to provide them with the best service are what bring you in every day. These are what make you work your hardest.

Confidence is also key in dealing with your customers. You must have a deep understanding of what your customers need and the certainty that you’re providing them the best service. Your customers rely on you to keep their businesses running smoothly, and you in turn feel confident that your customers will communicate clearly with you and fulfill their financial obligations to your business relationship.

Your confidence in your own skills is what leads your business to success. When the day-to-day operation of your company relies heavily on the decisions you make and the actions you take, you need to be certain you have the knowledge and the skills necessary to keep your business growing.

Confidence is also important in your relationship with a lender.

When you apply for a loan or any type of business financing, you need to be confident that the financial plan you’ve set up for your business is compatible with the particular product you choose. This means that you’ve asked all the right questions and know the product up and down.

You also need to be sure that the product you’ve chosen is something your business is able to support. For example, if you choose a lending product related to your accounts receivable, or AR, like factoring, you need to know that your customer relationships are solid and reliable.

Similarly, if you take out a loan or a revolving credit line, you can set yourself up for a positive, long-term relationship with your lender by looking at how the payments will fit with your cash flow plan. Confident business owners create positive account history because they know their business’s needs and capabilities inside and out.

Projecting your confidence as a business owner inspires confidence in a lender about doing business with you and sets you up for success.

3. Proactive (not reactive) mindset

As an entrepreneur, you no doubt know the importance of a proactive, not reactive, mindset. If you typically just react to situations, you have to work three times as hard to resolve an issue that may arise with a customer or employee.

A proactive approach yields better results. When you anticipate the concerns of your customers, you can create and maintain strong client relationships because your customers can see you’re looking out for them.

This also helps save you time and energy as a small business owner. You know the saying: A stitch in time saves nine. Having to patch up problems that you could have anticipated leads you to spend valuable time that you could have used for finding ways to grow your business. That’s why it’s usually important to keep problems from arising in the first place.

Being proactive is also important in managing your business finances.

One of the biggest mistakes entrepreneurs make is not paying enough attention to the funding needs of their business. Many small business owners wait too long to apply for a loan or a business line of credit. As a result, some end up with fewer good options. It may be counterintuitive to look for a funding partner when business is good, but having an established relationship with a lending partner can be an invaluable tool.

A proactive mindset also helps you out in maintaining your lending relationship: You know what your business needs and when to ask for it. Whether you’ve grown your team and need to ensure your advance is in your account by the time you run payroll, or you’ve started to work on a new contract and know you’ll need a credit line increase, getting a head start is the way to go.

When you’re proactive in running your business, instead of putting growth on hold to backtrack or rush to a solution, you set yourself up to grow at your full potential.

This article originally appeared on Fundera

Photo credit: kenteegardin via Visual Hunt / CC BY-SA

Communication, confidence and a proactive mindset will serve you well in managing your business finances.

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