Do you own or operate a small business? Then trust us: you can’t afford to ignore the following smart finance tips.
Managing your finances is only one of the many complex, distracting challenges of running a business. But a big enough mistake in this area could cost you everything.
So allow us to help you keep this monster under control. Once you know how to start a business, what follows are 6 easy-to-understand, simple-to-implement, and totally essential finance tips for small business owners. For your sake, spend the next 5 minutes learning these tips.
1. Separate Your Personal and Business Finances
When you own, run, and pay the bills for your own business, it’s hard to tell where your personal finances end and your business finances begin. But it’s essential that you figure this out before both of these financial areas fall into ruin.
First, if for no other reason, do this for the sake of tax season. You must be able to report the difference between your personal and business expenses. So, keep track of these in the present.
Plus, it’s impossible to budget for either your personal or business finances when they’re intermingled. Decide on a business budget and stick to it.
Don’t “help out” your business by dipping into your personal finances. This is just reinforcing poor business budgeting habits.
2. Hire Professional Accountants
If tip #1 already sounds too difficult for you, it probably is. But that’s fine; that’s why there are professional accountants for hire.
If tracking and managing finances is a struggle for you, stop trying to do it yourself. There’s no sense in spending too much of your own time on accounting, especially if you’re likely to make costly mistakes.
Let a professional handle it. They’ll do a better job, saving you money. Plus, this will free up your time to spend on other important business planning tasks.
3. Automate Bill Payments
This is another extremely simple way to make your business finances easier to manage. Make use of modern technology and automate all regular bill payments. You can usually do this through whatever companies are billing you or through your business bank account.
There are also plenty of accounting apps available to help you track your finances. Both of these options will greatly reduce your chances of missing payments or other financial mistakes. For that reason, both are also worth doing in your personal finances, too.
4. Keep Expenses Under Your Budget
Your business finances should never be “guesswork.” If they are, you’re sure to go bankrupt.
Know how much your business costs to run each month. Start with bills. Add whatever expenses you must pay in order to make a profit (such as stocking up on items for sale).
Add a little extra for “cushion.” Then, always try to spend less than this total amount each month.
5. Have an Emergency Fund
When we say spend less than your budget, we mean it. You are going to need that extra money you save each month when the slow season hits. Put a little of your business’s money each month in a savings account as an emergency fund.
Lastly, you won’t believe how much money you’re losing if you’re not invoicing right away. Late payments cost businesses $3 trillion per year.
If a customer or client owes you money, call them. Specifically, call before the payment is late.
A simple reminder might be the difference between getting paid this month or getting paid next month. What could you do with that money?
Remember These Smart Finance Tips
Want to stay in business for a long, long time? Then remember (and use) these smart finance tips for your business.
Now, read 5 Money-Saving Habits Millennials Are Adopting.