Let’s face it; launching a business is one thing, but making efforts to help it reach newer heights of success is a different story. Making your business successful isn’t just about having unique ideas or marketing your products/services; there’s more involved in running a business and manage small company finances .
Financial management is also an integral part of every business, no matter the type or size. Put it this way, how well your company operates depends significantly on how well you organize and manage your finances.
In addition, sound financial management is necessary for your small company’s long-term growth and sustainability in the highly competitive business world.
Do you know roughly 82% of small businesses fail because of poor cash management? While the stats might seem intimidating, the good news is there are many ways you can adopt to avoid such a fate.
Thus, without further ado, let’s delve into practical tips you can incorporate in your business strategy to manage your finances:
1. EDUCATE YOURSELF
Without a clear understanding of your business’s financial state, you can’t make more intelligent decisions to help your small company thrive.
Answer this. How can you keep tabs on your finances and manage them efficiently when you don’t even understand the different aspects of finances? That is why educating yourself is necessary.
You might be feeling a little reluctant to continue your education since you can’t achieve a work-life balance.
An Online Master of Business Administration in Finance Program is the ideal degree for you to understand the various components of finance and learn ways of making lucrative decisions for your business.
2. CREATE A STRICT BUDGET
Once you have a thorough knowledge of business finance, your next step is to establish a realistic budget. Your budget will give you a clear picture, and you can earn revenue sooner than you expected.
Make sure to count every single expense when creating a budget to keep your finances on track. Ensure to include all costs such as inventory purchases, utilities, taxes, payroll, etc., while budgeting.
But, don’t rely on your initial financial budgeting for too long. It is advisable to review your budget now and then and make changes accordingly.
Lastly, your efforts to create a budget will drain if you are not strictly following it.
3. KEEP AN EYE ON YOUR EXPENSES
As a business owner, you must pay special attention to the movements of your money. Do you know how much money is going out of your small company each day, week, or month?
If you have turned a blind eye to this, you might find yourself in hot waters. There is a high possibility that you are either misusing or overspending your expenses if you don’t monitor your finances strictly.
Keeping an eye on your money movements is also an excellent way to determine which of your business operations are working efficiently and where you need to cut costs.
4. CUT COST AND INCREASE REVENUE
You want to control your finances to help your business grow. And what better way to do so than cutting your expenses and increasing the revenue.
But unfortunately, while these steps may look easy. In reality, they are pretty challenging to achieve. So, to get started with cutting your costs, take a closer look at your small business expenses and learn which of your expenditures are giving you a good return on investments.
That way, you will be sure that you aren’t spending your hard-earned money on irrelevant projects. Moreover, you can increase revenue by offering coupons and discounts, providing complementary products/services, etc.
5. MAKE SEPARATE ACCOUNTS FOR PERSONAL AND PROFESSIONAL MONEY
Picture this. You met your potential client at some café in hopes of landing a deal. Chances are you paid the bill with your personal card. And while this may seem like a small act on your part, don’t make such mistakes!
Mixing the two accounts is a recipe for disaster. Keeping your professional finances away from personal at all costs is better.
Doing so can help you stay away from stress and also help you in keeping your expenses on track. Thus, the best way to do this is to have separate personal and business accounts.
If not, you are most likely to use your personal money for business purposes or vice versa.
6. EMPLOY SOFTWARE- SMALL COMPANY FINANCES
Undoubtedly, running a business is a daunting task, especially when you have just started and wish to grow it. You have so much to do on your plate with so little time.
However, fortunately, technology today can save your time and energy and make your business operations more efficient. Thus, take advantage of accounting software that may help you better manage your cash flow and other finances.
Investing in accounting software is also a great option if you don’t have enough budget to take help from a professional accountant.
However, before choosing the accounting software, identify your business needs.
7. TAKE HELP FROM PROFESSIONALS – SMALL COMPANY FINANCES
Running a business is never a solo venture. So, if you aren’t tight on budget, then hiring a professional accountant to manage your small company finances might be a perfect decision.
Keeping an eye on your finances is an ongoing job. When you just started your small company, it might seem to you that you can handle your books and file taxes on time.
However, keeping up with your company accounts gets challenging with time. That is why taking help from a professional is recommendable. Furthermore, you don’t have to hire a permanent full-time accountant necessarily. You can also outsource an independent accountancy firm to help you manage your finances.
8. SET UP EMERGENCY FUNDS
Scenarios like these are, without any doubt, a nightmare for any business owner. What will you do if your business does not earn profits for a few months? Or worse, if your business experiences a major setback?
Yet, one needs to remain prepared for every situation. Thus, keeping some cash reserved in an emergency fund can help you survive tough times. So, whatever your expenses stay at the end of your month, make sure to put them in your emergency funds account.
Also, keep in mind your emergency account is strictly untouchable.
Starting a new venture in the highly competitive business world isn’t easy. It is both exciting and risky. Many factors contribute to your success, and financial management is one.
Your finances can decide your company’s fate if you’re not taking it seriously. Although you might already have enough on your plate as a small business owner, financial management should never be an afterthought.
Even if managing finances seems daunting, you can learn how to keep your cash flow steady with some practice.
All in all, knowing your numbers can help you make informed decisions which in turn help your long-term growth and development.