Financial security is often a tough terrain for the small business owner. One of the key factors of early business success is the expertise you invest to create a unique and valuable product or service.
However, if you don’t have a lot of business finance management experience, all of your hard work can feel like a chore and you could be falling into bad financial habits that might one day damage your business.
Here are a few things you should do to stay on top of your finances as a small business owner.
Investing in Growth
It’s important you pay yourself first, but it is also critical that you try setting aside money and looking at opportunities for growth. This will help steer your company in the right financial direction and grow it.
Have a Good Billing System
Each business owner has a customer who is constantly late on their invoices and payments. Managing your small business finances also involves controlling the cash flow to ensure that your business operates day-to-day at a healthy level. If you’re struggling to collect from some clients or suppliers, it may be time to be innovative about how you bill them.
Spread out Tax Payments
Make your tax payments a monthly payment if you have trouble saving on your quarterly tax forecasts. This way, you can more efficiently handle tax payments, just as you do any other monthly operating expense.
Invest in Technology
Invest in technology and familiarise yourself with all the technical jargon relevant to your business in order to maintain a good share of the market. Sometimes it’s better to use online software to keep your financial and accounting records and create an online presence to draw more customers.
Clearly Business Separate from Personal Finance
Once you have your business name and registration picked, you need to open a commercial bank account. There should be a separate account for your personal and business bank accounts.
Maintaining a borderline between these two accounts will make accounting for tax purposes at the end of the financial year much clearer. It will also reduce any cash crunch situations in the company due to personal spending withdrawals.
Monitor the Books
This is an obvious but very necessary activity. Do your best to set aside the time to review and track your books every day or month, even if you are working with a bookkeeper. It will allow you to become more familiar with your company’s finances, but will also give you an insight into potential financial issues.
Focus on Expenditure, but Also on ROI
Comparing expenditure and return on investment will give you a clear picture of what makes the investment worthwhile and what might not be worth continuing.
Set up Good Financial Habits
Creating internal financial policies can go a long way towards maintaining the financial health of the business. Keeping up with your finances will also help mitigate the risk of fraud.
Consider Insurance
As an entrepreneur, business insurance is easy to forget about but is so important. Make sure you spend some time researching what’s right for your company and your personal needs in order to create a sustainable portfolio and handle small business finances.
Plan Ahead
There will always be company issues to be addressed today but you need to plan for the future when it comes to your finances.
