Spring is a time of renewal and fresh starts, making it the perfect season for small business owners to take stock of their operations and make strategic moves to ensure their company’s growth and stability. Fortunately, we had the opportunity to sit down with Phanikar Yenamandra, Vice President – Customer Marketing & Engagement, International Card Services at American Express, to discuss a critical aspect of this process: spring cleaning your small business for optimal performance. In this interview, Yenamandra shares his expertise on managing cash flow, the impacts of insufficient cash, strategies for optimizing working capital, the importance of regularly updating business plans, and how technological upgrades can significantly benefit small businesses, especially in streamlining payment processes. Join us as we uncover valuable advice and practical steps to not only survive but thrive in the ever-evolving landscape of small business ownership.
How does managing cash flow contribute to the overall success and growth of a small business?
Managing cash flow effectively is typically one of the biggest challenges small business owners face. In fact, according to a 2023 Amex survey of small business owners, 63% said insufficient cashflow had caused challenges when running their business. With proper cash flow management, small businesses can remain nimble and respond to business needs in real-time, like jumping on an expansion opportunity or weathering an unforeseen downturn in revenue growth. Without proper cash flow management, it is inevitable that a small business will start hitting operational roadblocks.
In what ways can insufficient cash flow impact small businesses’ ability to grow or cover operating expenses?
Insufficient cash ultimately hinders a small business’s ability to cover basic operating expenses, such as inventory, rent, or payroll. Worse than that, it impedes their ability to seize new growth opportunities because the focus shifts to managing their day-to-day survival versus setting themselves up for success long-term.
What are some practical strategies for optimizing working capital in preparation for seasonal fluctuations in business activity?
To help ease seasonal dips in sales activity and optimize working capital, we recommend small business owners stay on top of the following areas:
- Forecasting: Small business owners can get ahead of the game by analyzing historical data and market trends to predict demand swings throughout the year, helping them allocate resources more efficiently throughout the year.
- Inventory Management: Keeping their shelves stocked just right with a “just-in-time” approach to inventory enables small business owners to cut down on extra costs during slower times, while still having enough inventory on hand for unexpected surges in demand.
- Cash Flow Management: Small business owners can smooth out the peaks and valleys in their cash flow by negotiating longer payment terms with suppliers during quieter periods, while also staying on top of accounts receivable to get cash in the door faster.
- Payment Flexibility: Look for payment products that offer flexible payment options, such as extended interest-free days to pay back expenses, that can help maximize cash flow.
- Diversification: Small business owners can help reduce their reliance on seasonal influences in just one area by exploring new products or markets to target, keeping their business resilient year-round.
Why is it important for small business owners to regularly review and update their business plans? How can this contribute to their success in the long run?
Regularly reviewing and updating business plans is important for small business owners for one simple truth – it allows them to identify emerging challenges and new opportunities for their businesses. Changing market conditions, new competitive threats and changes to the regulatory landscape all warrant a review of an existing business plan. By proactively implementing plan revisions, small business owners can maintain their competitive edge and an environment ripe for innovation and growth.
How can technology upgrades, such as software updates or hardware advancements, help small businesses improve their productivity levels?
Technology upgrades can help small businesses improve their productivity levels by automating tasks, streamlining processes, and enabling more efficient collaboration amongst team members. For example, small businesses using the latest payments technology are enabling quick and secure transactions that not only enhance the customer experience but drive operational efficiency for their business by preventing unnecessary lags in getting paid. This gives small business owners more available working capital and the time back to focus on strategic initiatives that will benefit their business in the long-term.
American Express is bringing the latest tech to the table with virtual cards, interactive analytics, digital banking, and small business loans, giving small business owners the power to handle their finances like never before.
What are the benefits of adopting new technology for small businesses, particularly in terms of enhancing the speed and effectiveness of payments?
Small businesses adopting new payments technology benefit from accepting faster and more secure payments from customers, which is important for optimizing cash flow. Businesses can also use new technology solutions to help them pay their own bills in a faster and more secure manner. This helps to streamline their backend payment processes, cut down on paperwork and lower the chances of human error. When it comes to payments, technology should be helping small business owners get paid quicker and manage their finances better so they can focus on what matters – strategy, planning and seizing new opportunities for growth.
