It was recently revealed that 40% of all UK businesses are forged with less than £500, although it is fair to surmise that this does not include the growing army of tech start-ups.
This is despite the fact that even advanced technology is accessible to small businesses, as the cost of infrastructure and securing intellectual property rights can often hinder small businesses. As a result of this, it is increasingly important that growing tech companies manage their money well, both when launching and attempting to establish a sustainable business model.
In this article, we will look at the benefits of this and ask how tech companies can be smart with their money.
- Responsible Spending Can Help Companies to Survive Periods of Austerity
According to some commentators, British business confidence is at its lowest level for six years. This is primarily the result of a weakening economy and the ongoing spectre of Brexit, which is increasing the cost of imports and creating a genuine sense of pessimism among entrepreneurs.
A plunge in business confidence does not mean that companies have to eliminate spending altogether, however, just as periods of positive sentiment need not force them to spend excessively.
Instead, it is far better for tech companies to spend responsibly and minimise operational costs where possible, while optimising the amounts that they invest into sales and marketing. While the emergence of Cloud computing and open source technology has helped with this, responsible spending must be a dominant part of your overall commercial strategy.
- Smart Finance Management Can Help With Tax Compliance
Another key concern for new businesses is tax compliance, as the failure to comply with existing legislation can cost companies huge amounts in fines.
By managing your finances in a smart and responsible manner, however, you can create an informed and tax compliant business model that safeguards your long-term interests. You can work with industry experts to achieve this, including audit and tax professionals with an innate understanding of legislation in specific industries.
Take RSM Global, which can provide proactive audits of your spending while also ensuring that you are meeting your full tax liability. This is extremely beneficial, particularly as you look to ensure that your money is invested in the right places.
- Financial Responsibility Minimises Your Long-term Debt Burden
On a final note, a responsible approach to spending can also minimise your businesses long-term debt burden, in more ways than one too.
To begin with, creating a manageable and sustainable budget means that you will never spend outside of your means. This is because such an approach can drive sustainable and organic growth, negating the need to borrow from third-party investors and sacrificing equity in your business.
If you do need to borrow money in order to alleviate initial cash flow issues, you can also seek out short-term lending options such as factoring. This practice requires you to sell your invoices and accounts receivable to third-party investors, before repaying this debt once clients have made their repayment in full.