How to Better Manage Finances in Your Small Business
SmallBizLady: How did you manage your finances in the first few years?
Nicole Snow: I managed them with just an accountant at first. I remember getting frustrated with him when I tried to do more projection-based decision making. Then I realized I needed to graduate to bring on a bookkeeper. He was great until we grew into more complexity in the business. When I brought on my CFO, I look back and wished I had engaged a CFO (even for 1-2 hours a week) from the start. My CFO has brought a level of sophistication to understand how my numbers work and even helps with the management of contracts. She pays for herself every month.
SmallBizLady: How did your team need to change as your finances get more complex?
Nicole Snow: My CFO and I went through every position and we identified how the position gave us a return. With some positions, it’s fuzzy math but the purpose is to talk through each position and have a real understanding of why someone is there. Are they providing value? How much do they really cost? What is their growth potential? Can this be outsourced?
As a founder, those are hard questions to sometimes answer but when you have the support of someone who understands the impact to the overall business it can help clear out inefficiencies or highlight needs for hiring.
SmallBizLady: How does your focus on being a triple bottom line social enterprise affect your business finances?
Nicole Snow: As it relates to inventory, we need to understand the impact of paying 100% upfront for our supply. And if there are delays (like a global pandemic) you are then sitting without the cash or the inventory for weeks and sometimes months. Paying vendors up front is important because it keeps funds flowing at their organization so their workers continue to get paid. We work with very small co-ops and businesses globally and they don’t have access to capital and banking relationships. In some ways, we are the bank for them. So, the onus is on us to juggle how that affects our current cash flow and P&L.
How to Achieve Excellent Credit
SmallBizLady: Why is it so important to have good credit?
James Hunt: Good credit and access to credit make everything in your life easier. It allows you to walk through financial doors that are closed to those who have bad credit – whether you are buying a home, buying a car, or trying to secure a loan for a home or your business. Those with credit can walk with confidence knowing that they already qualify for what they want.
SmallBizLady: What do you define as a great credit score?
James Hunt: Your credit score can range from as low as 300 to as high as 850. I consider bad credit anything under 600. The technical answer is anything under 580 is considered very poor credit. 580 to 668 is fair credit. A credit score above 669 places you in the good credit category. Once you get above 740 you enter the very good or excellent credit category and the world opens up to you as far as what you can qualify for.
SmallBizLady: What are some of the biggest “credit myths” out there?
James Hunt: Some people believe there are certain things that can’t be removed from your credit record. Anything can be disputed off your credit report. Student loans, repossessions, foreclosures, bankruptcies. I know, because I handle it for my clients all of the time. You just have to understand the laws and you have to be persistent.
Did you find these interviews helpful? Please tell me how they helped and then share them.
Would you like to be a guest on #Smallbizchat?
If you are a small business owner, author, or subject matter expert, we’d love to have you appear as a guest on #Smallbizchat LIVE. Submit your name, headshot, Twitter handle, bio, website, topic, and 3 questions and answers in paragraph form to demonstrate your expertise. To submit your materials to be a guest on #Smallbizchat click here.