On the surface, the purpose of a business is simple: you create goods or services that you can sell to those who want or need them. That’s it. But when you get to the nuts and bolts of running a small business and keeping track of expenditures, invoices and cash flow, then it gets a little more complicated.
Money management for small business can be a difficult challenge for many owners, especially if they are responsible for everything. The good news is that there are a few simple tips that can help anyone stay on top of their company’s finances. Here are some things to keep in mind so that you can keep up with your business finances.
Set a Budget
The most important thing you can do in order to set yourself up for success is to create a budget for your business. This will allow you to see both your financials strengths and your weakness, giving you an opportunity to correct any problems quickly and accurately.
Go through all of your financial records and find out what your expenditures are, how you earn most of your revenue and all of the different accounts you may have open. This will give you a 30,000-foot view of your business’s financial health. From there, you can stay on the same track if you like the way things are going, or you can make changes to plug any holes that cost you more than you’re willing to pay.
You can revisit your budget every year to make large-scale changes as well, like expanding your reach or going in a different direction.
Boost Cash Flow
There is nothing that makes your business problems go away faster than having more cash coming in. The more overall revenue you have, from as many sources as possible, will make a dramatic impact on your company’s financial health.
A simple way to increase cash flow is to offer discounts to clients who pay their invoices early. Sure, you may make a little less overall, but the increased injection of cash on a weekly or monthly basis will allow you to pursue your business plans with more confidence.
You should also have a plan for keep cash coming in when times are slow, like credit cards for small businesses or other accounts that can give you cash when you need it.
Finally, make sure that you have money stashed away. Not only will this help you during slow times or during an emergency, it will give you the option of making aggressive moves that can position your company better.
While you look over your budget, make sure that you include a certain percentage that you want to set aside each month. You can choose to put the money into stocks or securities if you want, but the most important thing is that you save money and don’t make it hard to get to if you need it.
These simple tips can help anyone having trouble with their money management.
Harvey Faulkner shares his business tips and tricks, mostly aiming his articles at the self-employed. He has been self-employed for much of his adult life, and loves being his own boss!