It’s OK to admit it: running a small or mid-sized business is overwhelming.
There’s so much to do keeping tabs on every aspect of the business: Accounting. HR. Sales. Customer relations. Marketing. And the list goes on.
But there’s an added stress for companies whose business depends on shipping physical products to customers: logistics.
Frustrating as it may seem, these businesses — retailers, wholesalers and manufacturers, among others — can’t compete with a great product alone. Accounting and logistics are crucial to a company’s long-term prospects, but business owners are often stuck overseeing the books and fulfillment, sometimes with little or no help.
And that can cause problems.
Without a sound accounting and logistics strategy in place, business owners lack crucial information to manage day-to-day operations or create long-term financial plans. Here’s how a disjointed approach to accounting and logistics could harm your business.
Inability to deliver accurate shipping estimates
The explosion of e-commerce has recalibrated customers’ expectations. They want a simple online shopping experience, and they want shipping to be fast, simple and as cheap as possible. In a recent UPS report, 79 percent of respondents said shipping fees were the top factor to influence their purchase decision, trailing only product price (81 percent).
But for SMB owners, there’s often a disconnect between accounting and logistics software. Shipping errors and incorrect estimates frustrate customers and can cost businesses money, making it difficult for them to offer perks, such as subsidized or free shipping, without potentially taking a financial hit.
Misunderstanding cash flow: a mortal sin for any SMB
The odds are already stacked against small and mid-sized businesses. Nearly half of small business fail within five years, and a common culprit is inadequate cash flow management. For companies whose business depends on shipping product, cash flow is tied directly to logistics since the payment doesn’t hit the books until the customer receives the product.
A new Sage report, “The Domino Effect: The Effect of Late Payments,” found that 30 percent of SMBs are feeling (or soon expect to feel) the negative impacts of late payments that could affect company investments, suppliers and even staff pay.
The quicker a business ships products, the quicker it gets paid. And by closely linking finance and logistics, business owners get more accurate, up-to-date revenue projections — and avoid the negative financial and customer relationships issues that stem for late payments.
Small doesn’t mean local: tapping into a global market
The internet has opened the global market to even the smallest business. According to the U.S. Small Business Administration, small businesses account for about a third of U.S. exports. But some companies remain reticent to seize business opportunities beyond their borders out of fear that navigating customs or estimating shipping costs would be insurmountable.
That’s why small businesses need a simple way to estimate shipping costs — not just across the country, but across the world — and add those costs to the invoice at the time of sale. By ignoring the global market, business owners forego growth opportunities — and billions of potential customers around the world.