Here we often talk about small businesses in addition to personal finance as these are closely tied. We talk about financial management, whether it’s personal finance or business finance, the concept is the same. The best practices for managing finances are the same.
When running a small business, you must have the right skills, knowledge, and expertise in place to ensure your day to day operations run smoothly and according to plan. The last thing you will want is for your company to lose money.
Your first port of call should be educating yourself with the basic skills needed to successfully run a small company.
There are various things that you can do, such as performing straightforward accounting tasks and drafting up your financial statements. Both of which will help to create a solid financial future for your company.
To help get you started, here are 10 key tips that will help you to better manage your small business finances.
When running a small company, it’s only natural that you will put your heart and soul into the day to day operations, making sure your business becomes and stays successful.
When it comes to finances, it’s just as important to pay yourself as it is for your employees.
You need to remember that you are a huge part of the business, so you must compensate yourself for the hard work you put in.
Invest in Growth
As well as paying yourself, it’s crucial that you set some money aside to look into opportunities on how you can grow as a business.
Not only will this help move your company into a healthy financial direction, but it will also mean that you can keep track of the future of your company.
Small businesses need to continue to grow to attract the best employees and the right consumers, therefore, investing in the future of your brand will help you keep your business afloat.
Spread Out Tax Payments
If you have difficulty saving for your estimated tax payments, you may prefer to go down the monthly payment route instead, rather than quarterly.
With so many other aspects of your business to focus on, it can be easy to take your eye off the ball and get lost in your operation.
Treating tax payments like any other monthly operating expense will help you stay on track and ensure that you are doing everything above board.
Curate a Good Billing Strategy
No matter how well regarded your small business is, every business owner will encounter a client who is consistently late on their invoices and payments.
If you are experiencing problems with collecting from certain clients or customers, it may be the right time to think outside of the box and come up with creative ways on how to bill those who use your services.
Having too much money tied up in unpaid invoices can cause all sorts of cash flow problems, so trying out a different approach may help your clients be more on the ball with their invoices.
Monitor Your Books
While it may seem like an obvious aspect of the business, monitoring your books is crucial for becoming familiar with all the finances involved in your company.
Make sure to allocate some time to keep a check on your books to ensure everything is running according to plan.
It’s important not to neglect your bank reconciliations, as failing to do so may open up your company to wasteful spending or embezzlement.
Set Up Good Financial Habits
Determining internal financial protocols can go a long way in protecting and monitoring the financial health of your company. Keeping up with the finances in your small business can also help you lessen the risk of fraud.
When it comes to reimbursements, you also need to track them. To fully understand reimbursements, check the types of reimbursable expenses to keep your business’ finances in record to avoid possible fraud risks in the future.
As a small company, you will be often strapped for time and money, however, this should not prevent you from implementing some kind of internal control.
Focus on Expenditures& ROI
Measuring your expenditures and ROI (return on investment) can give you a better idea of the types of investments that you should be making in your company.
Small business owners need to be cautious about how much money they’re spending and where it’s going.
If you don’t focus on the ROI, you may lose money on bad spending bets. You must know where you’re spending your cash, and how that investment is paying off.
There are all sorts of key skills and traits that you can learn as a small business owner which can help when it comes to managing your finances better.
Whether that’s by undergoing regular training or studying for an MBA in Finance, which can teach you the financial tools you need to keep track of your finances.
Every business owner needs to have the right soft skills in place too, such as knowing how to lead a team, understanding time management, and learning about project management.
This can also help you stay on track with your business’s finances.
Before starting any project or task, you need to have a budget in place which can help you work out your finances better.
Make Financial Projections
Any successful business needs to have clear financial projections in order. To ensure you are on the right track in your company, you must create a business plan.
A business plan will help you anticipate and address any possible future obstacles in your business. Having a solid knowledge of where every dollar is going is important.
Use an App
There are lots of apps that you can download on your smartphone which can help you monitor what’s going on with your business expenses without having to put too much effort in.
Whether you pick FreshBooks, Square, or Shoeboxed, there are various apps for business finance which can be downloaded on your iPhone or Android device.
To ensure the cash keeps flowing, you need to have a good grasp of the state of your financial affairs.
Staying on track with your finances can avoid you from getting into debt, as well as making sure you have enough funds to grow your business.