19 Must-Know Financial Tips for Small Businesses in 2021

1. Apply for a PPP Loan

Ed note: The PPP program officially ended on May 31, 2021 Currently, you may have other options for small business financing. Learn more about financing options for your business here.

President Biden signed a PPP extension into law that moved the application deadline from March 31, 2021 to May 31, 2021. However, funding is still on a first-come, first-served basis—apply ASAP because funds may run out.

On your first PPP loan draw, you may qualify for a loan up to $10 million, while a second PPP loan draw may qualify for another $2 million. The total of the 2 draws cannot exceed $10 million, and the amount is based on your monthly payroll. You can read more about how to estimate your loan size (and check out our handy calculator). When used appropriately, PPP loans are 100% forgivable—which means they’re essentially tax-free grants for your business.

PPP loans don’t require any application fees or other costs, so there’s no reason not to apply and get your business some much-needed SBA funding.

Learn everything there is to know about PPP loans in our PPP Loan Relief hub.

2. Stay on Top of Your Financials

Monitor the ebbs and flows of your cash with a bookkeeping system. We know we’re biased, but we prefer Sunrise—it’s a free bookkeeping platform that makes it easy to stay on top of your books.

A bookkeeping system will help with invoicing, financial reports, expense tracking, taxes, and oh-so-much more. Consider hiring a bookkeeper to handle the nuts and bolts of bank reconciliation stuff so you can focus on running the business.  

3. Dial Down Your Costs

Your business might not need more revenue to stay afloat—it may just need fewer expenses. Look at your financials (good thing you got started with the bookkeeping in tip #2) to see what costs you can cut:

• Office: If remote work is working for your business, consider ditching the office completely and recouping your rental fees.
• Non-Traditional Marketing: Stop throwing money at TV commercials and radio ads, and start using channels where you can more accurately track ROI (like email marketing and PPC ads).
• Perks: You can spoil your employees without spending burning your payroll budget. Offer innovative perks and benefits like free meals and parking rather than on-site gym memberships and annual bonuses.
• Bulk: If your business is in it for the long run, buy in bulk. This approach has a more expensive upfront cost, but it’ll save you massive bucks throughout the rest of the year.
• Equipment: Rent, lease, or buy used equipment instead of investing in shiny new gizmos and gadgets.

4. Budget Like a Pro

Boosting revenue and cutting costs won’t amount to much if you don’t know where the money is going. Start dialing in your budgets.

You may already have all the money your business needs—you just need to reallocate it to the right places. Budgets and cash flow forecasts give you insights into future dry spells so you can save or secure necessary financing in advance.

This leads us perfectly into tip #5.

5. Secure a Business Line of Credit

Every business should have a line of credit in its back pocket. A business line of credit is a no-obligation financial safety net. Use it to cover expenses or save it for an emergency—the choice is yours.

You can use a business line of credit to cover practically any business-related expense, making it a flexible financing tool for just about everything. Plus, you only pay interest on the funds you use—not the entirety of the credit line.

Unlike a small business loan, you don’t have to reapply when you need funding. Once you repay the portion of the credit line you used, you’ll get immediate access to the capital again.

Now, that’s no-hassle financing!

6. Streamline Your Inventory

Too much stock, and you’ll waste money on warehouse expenses. Too little stock, and you’ll miss out on potential buyers. Finding the Goldilocks-approved level of inventory is easier said than done, but it’s essential if you want to maximize profit.

Try using a tool like Zoho Inventory or Lightspeed to better manage your inventory with real-time data, automation, and insights.

7. Take Your Business Online

If you haven’t already, it’s not too late to take your business online. Going digital with your business unlocks doors to whole new audiences, and it makes you less vulnerable to in-person restrictions (like we saw with the COVID-19 pandemic).

Here are a few simple (but very effective) ways to boost your digital presence in 2021:

• Start a website: Consumers expect businesses to have websites—even if you’re just a tiny mom-and-pop shop. Fortunately, tools like Squarespace and Shopify make it easy to set up a top-notch website in little-to-no time.
• Create valuable content: All that knowledge you share one-on-one in your store—share it online and help more people. In return, they’ll hopefully show their appreciation with their wallets.
• Get active on social networks: Facebook, Instagram, LinkedIn, Twitter, YouTube—that’s where your audiences live an average of 153 minutes of their day. Interact with them there by getting active with your business’s social accounts.
• Launch a promotional strategy: Email marketing returns an average $42 return on every dollar spent, and SMS has an average 94% open rate—expand your promotional tactics to reap the financial rewards from these channels.
• Pivot to digital products and services: Don’t just rely on in-person shopping—pivot to digital products (like ebooks and courses) and services (like online yoga classes and consultations).

8. Refine Your Offerings

Fine-tune your products and services. Focus on quality over quantity—more is not better.

Many restaurants cut menu items to accommodate shortages and inventory constraints. This strategy allowed them to focus on a few top-notch dishes rather than everything under the sun.

Refining their offering reduced inventory costs (storage, waste, space, etc.) and also made it easier for consumers to choose.

Pareto Principle states 80% of consequences come from 20% of causes. Find what 20% of your business offerings drive 80% of your sales—prioritize these and eliminate the rest.

9. Rebuild Your Rainy Day Fund

While we’re not quite out of the woods yet, it’s never too early to start rebuilding your cash cushion.

If the pandemic completely drained your rainy-day fund, consider putting more in it this time. While we’d hate to experience another economic year like 2020, it’s best to plan for the worst.

If you’re strapped for cash right now (like most businesses are), don’t make it a huge financial commitment. Just put aside a teeny-tiny bit from each sale or monthly profit—it can add up to considerable savings in the long run.

Also, consider getting a business line of credit. It’s a great financial safety you can keep around for just-in-case scenarios—and it won’t eat it into your cash flow in the meantime.

10. Invest in the New Normal

It takes money to make money. It might seem counterintuitive to be spending money right now, but investment in the new normal could significantly boost your ROI.

Masks and physical distancing will hopefully go away soon, but touchless checkouts, online ordering, delivery, curbside pick-up, and online classes are here to stay. Don’t “just get by”—invest in making these new solutions as optimized as possible. They’re not going away.

11. Stop Saying ‘When Things Go Back to Normal’

While we’re on the topic of the new normal, let’s address a dangerous self-imposed roadblock that small businesses are creating. Stop waiting for things to go back to normal (whatever that really is).

Things will never quite be the same again. Yes, many old habits, traditions, and ways of doing business will return, but that could be next month, next year, or never.

Pivot now, pivot again later, and pivot again and again if you have to. Don’t sit around making promises that you’ll do such and such “when things go back to normal.” Run your business as if things will continue the way they are now forever.

12. Automate Your Finances

You have enough on your plate already—automate your trivial financial to-do list. The right bookkeeping software should keep you out of the books and focused on your business.

Unless you are an accountant, you have much better things to do than manually sifting through your receipts and transactions. With Sunrise, you can automate your invoicing, email reminders, expense tracking, expense categorizing, and much more.

13. Refinance Your Expensive High-Interest Debts

Refinancing your business debt could lead to lower interest rates, lower monthly payments, and better terms. It’s not right for every situation, but there are certain scenarios where it can be a game-changer for your business.

Here are a few signs you’re ready to refinance your business loans:

• Your credit score has improved
• You’ve gained significant equity in your business
• Current interest rates have dropped
• You need extra cash month-to-month
• Your business has grown
• You have several smaller loans
• You’re committed to sticking with your business

If any of those conditions are true for you, consider refinancing your business debt.

14. Overcome Your Fear of Debt

There’s good debt and bad debt—know the difference:

• Bad Debt: Loans that don’t have intent or purpose
• Good Debt: Loans with a plan to accelerate growth and boost ROI

Yes, there’s always an inherent risk when taking on a loan, but the pros typically outway the cons. You may be wishing you could score a wealthy angel investor instead—however, giving up equity is almost always more expensive than taking on debt in the long run.

Debts get paid off—equity investments cost you a portion of your business forever.

Some business owners opt for risk-free bootstrapping instead. But this trades risk in exchange for time. And time is your most valuable asset. Don’t slow your business’s growth to save a few bucks.

15. Turn Your IOUs Into Cold, Hard Cash

Do you have a load of unpaid invoices sitting in your accounts receivable? Instead of suffering through cold sweats and sending countless emails, turn to accounts receivable financing (also known as factoring).

Accounts receivable financing empowers you to trade your outstanding invoices for immediate cash. Here’s how it works in a nutshell:

• You submit a loan application for accounts receivable financing
• Lenders reach out to you with their rates and terms
• You choose a lender
• Your lender pays you up front for your unpaid invoices
• Your lender follows up with your clients to collect the money due
• The lender then takes out their fees (usually 1% to 5% of the amount borrowed) and hands the balance over to you

Pretty cool, right? Don’t let IOUs slow or stagnate your business. Keep things moving forward with accounts receivable financing.

16. Start Setting Goals Again

Right now, most businesses are just rolling with the punches and letting fate steer the ship. Take control of your business’s destiny—start setting goals and moving toward them.

Set weekly, monthly, quarterly, and annual goals with the knowledge that you have now. Yes, things may change tomorrow, but you can always adjust your goals to adapt.

Running your business without goals is like getting in your car and driving off without choosing a destination first. It typically leads to wasted money, deceleration, and an uncontrollable trajectory.

17. Negotiate With Your Clients and Manufacturers

We’re all in the same boat right now. Talk to your landlords, clients, suppliers, and manufacturers. If they’re better off than you, there’s a good chance they’ll be willing to negotiate terms and rates.

Need tips for renegotiating your business lease? We got you covered. Check out our step-by-step how-to article.

While you’re at it, brush up on our top 12 Negotiation Tips for the New Small Business Owner. We’ll show you how to negotiate with customers, vendors, landlords, lenders, utility companies, government agencies, and more.

The amount of wiggle room will vary from industry to industry and organization to organization, but the purpose is to make sure you’re getting the absolute best deal for your business.

18. Enable Remote Work

Remote work isn’t just a trendy millennial lifestyle choice anymore—now, businesses big and small across all industries have adopted remote work policies. 

Mostly because they had to.

However, we’ll (hopefully) soon be returning to offices, storefronts, and restaurants. But that doesn’t mean you have to do away with remote work.

Don’t fear or tolerate remote work—embrace it! Maintaining and furthering remote policies can improve your hiring rates and help you find and retain the best talent. It’s also been proven to improve productivity and engagement.

Invest in tools and processes to optimize remote work at your business. That means purchasing collaborative software like Asana, Slack, Zoom, and more.

It might seem like a hefty investment, but studies show remote work is worth it in the end.

19. Apply for Small Business Grants

PPP loans aren’t the only “free” money available to your small business. Look around for other small business grants applicable to your geographic location or industry:

• Shuttered Venue Operators (SVO) Grant Program: The SBA’s Office of Disaster Assistance administers SVO grants for qualifying venues. You can score an SVO grant for up to 45% of your gross-earned revenue (up to a maximum of $10 million).
• GoFundMe Small Business Relief Fund: GoFundMe launched the Small Business Relief Initiative to help fund businesses impacted by COVID-19. Supporters can donate to small businesses, and GoFundMe will issue $500 in matching grants to qualifying companies that raise at least $500 on the platform.
• LISC Small Business Relief Grant: Local Initiatives Support Corporation (LISC) launched the Small Business Relief Grant to support rural-based small businesses impacted by COVID-19. These grants provide $5,000 to $20,000 in funding.

This is by no means an exhaustive list of grants. Do your research to find city, state, and industry-relevant grants for your small business.

Take Control of Your Business

COVID-19 did a lot of the steering in 2020—don’t let that happen in 2021! Follow these tips to gain greater financial control of your business. 

Not every tip on this list will be relevant to your business, and that’s OK. Hopefully, it’s served to give you a few helpful ideas and get your mind thinking about the possibilities.

Whether you need to boost revenue, cut expenses, or secure small business financing, you’re in charge of your business’s destiny.

Take control.

Need some help? We’re here for you.

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