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6 Tips for Managing Small Business Finances

Marcus Costales
October 14, 2020
6 Tips for Managing Small Business Finances

Every company, big or small, is always concerned about one thing: Managing money. Proper financial management is crucial to surviving a volatile economy and industry competition. Small businesses especially need to exercise caution with their financial decisions from the very beginning; it takes more than just a good idea to run a business. 

Every business needs a financial structure that generates a profit to stay credible. Entrepreneurs need to be equipped with good money management abilities to turn their venture into a success story. Not all business owners, however, are adept at handling finances. But that doesn't mean all hope is lost. Here are six tips for managing small business finances. 

First, educate yourself. One of the first things that you should do is educate yourself about the various aspects of Finance. For starters, learn how to read financial statements. Suppose you don't know how, financial statements tell you all about your money; where it originated from, how many hands it changed, and where it is. Financial Statements contain four essential details: cash flow statement, income statement, balance sheet, and shareholders equity statement. 

The Cash Flow Statement analyzes operating activities, investments, and financial outflow. The balance sheet provides information related to the company's assets, liabilities, and shareholders' equity. 

The income statement reflects the revenue earned within a specific period of time. Shareholders' equity represents how the company is financed through common and preferred shares to separate personal and business finances. Always keep your personal and business finances separate. This entails getting a business credit card and putting all related expenses on it. This should help you track your outlays and keep you in control. You will also do well in opening a savings account dedicated to your business, wherein you can transfer a certain amount of money from each payment that you receive and gradually build a considerable corpus. You can use this money to pay taxes three cut costs. 

Entrepreneurs must stay tight-fisted to keep their expenses in-check without hampering customer satisfaction. This especially holds true for small businesses. In every business, there are two types of costs- fixed and variable. Fixed costs have to be borne irrespective of whether your business is making money or not. There is scope for savings and variable costs. For example, instead of buying costly branded software, you can work with free, cloud-based open-source software, which is equally good. Conduct free online calls video conferences instead of traveling long distances. You can also try bartering your services with other professionals and cut costs for invest in cloud-based accounting software. 

While you can download regular accounting software to manage your finances, it will never give you the kind of convenience cloud-based accounting software can. Web-based software provides you with real-time insights as most allow you to store, update, track and access data from anywhere at any time. Whether you're at home, office, or traveling, you can conveniently work with your data from anywhere you like. It is error-free, hassle-free, and dependable. 

Monitor and measure performance. As a business owner, you must keep tabs on the movement of your money, especially when large amounts are involved. Keep looking at your company's financial performance compared to the past financial statements to project your future revenue, expenses, and cash flow. Being aware of these aspects will help you make informed decisions for your business. 

Also, hire professional help. Everyone needs help, especially a budding entrepreneur interested in making a huge success of his venture. Sometimes it pays off to engage an expert's services, even if it is on a part-time basis. That can help you determine where your business is heading by using and analyzing your data. Ensure you hire someone you trust, though, whether it is tax planning for the next financial year or payment for the current year. Their expertise can go a long way and guiding you and bringing you peace of mind. 

Conclusion 

While owning and running your own business can be exciting, it can also be nerve-wracking, especially when handling finances in a lucrative manner. Don't let your business suffer due to poor money management. Keep the above tips in mind and give your venture a bright future.

Every company, big or small, is always concerned about one thing: Managing money. Proper financial management is crucial to surviving a volatile economy and industry competition. Small businesses especially need to exercise caution with their financial decisions from the very beginning; it takes more than just a good idea to run a business. 

Every business needs a financial structure that generates a profit to stay credible. Entrepreneurs need to be equipped with good money management abilities to turn their venture into a success story. Not all business owners, however, are adept at handling finances. But that doesn't mean all hope is lost. Here are six tips for managing small business finances. 

First, educate yourself. One of the first things that you should do is educate yourself about the various aspects of Finance. For starters, learn how to read financial statements. Suppose you don't know how, financial statements tell you all about your money; where it originated from, how many hands it changed, and where it is. Financial Statements contain four essential details: cash flow statement, income statement, balance sheet, and shareholders equity statement. 

The Cash Flow Statement analyzes operating activities, investments, and financial outflow. The balance sheet provides information related to the company's assets, liabilities, and shareholders' equity. 

The income statement reflects the revenue earned within a specific period of time. Shareholders' equity represents how the company is financed through common and preferred shares to separate personal and business finances. Always keep your personal and business finances separate. This entails getting a business credit card and putting all related expenses on it. This should help you track your outlays and keep you in control. You will also do well in opening a savings account dedicated to your business, wherein you can transfer a certain amount of money from each payment that you receive and gradually build a considerable corpus. You can use this money to pay taxes three cut costs. 

Entrepreneurs must stay tight-fisted to keep their expenses in-check without hampering customer satisfaction. This especially holds true for small businesses. In every business, there are two types of costs- fixed and variable. Fixed costs have to be borne irrespective of whether your business is making money or not. There is scope for savings and variable costs. For example, instead of buying costly branded software, you can work with free, cloud-based open-source software, which is equally good. Conduct free online calls video conferences instead of traveling long distances. You can also try bartering your services with other professionals and cut costs for invest in cloud-based accounting software. 

While you can download regular accounting software to manage your finances, it will never give you the kind of convenience cloud-based accounting software can. Web-based software provides you with real-time insights as most allow you to store, update, track and access data from anywhere at any time. Whether you're at home, office, or traveling, you can conveniently work with your data from anywhere you like. It is error-free, hassle-free, and dependable. 

Monitor and measure performance. As a business owner, you must keep tabs on the movement of your money, especially when large amounts are involved. Keep looking at your company's financial performance compared to the past financial statements to project your future revenue, expenses, and cash flow. Being aware of these aspects will help you make informed decisions for your business. 

Also, hire professional help. Everyone needs help, especially a budding entrepreneur interested in making a huge success of his venture. Sometimes it pays off to engage an expert's services, even if it is on a part-time basis. That can help you determine where your business is heading by using and analyzing your data. Ensure you hire someone you trust, though, whether it is tax planning for the next financial year or payment for the current year. Their expertise can go a long way and guiding you and bringing you peace of mind. 

Conclusion 

While owning and running your own business can be exciting, it can also be nerve-wracking, especially when handling finances in a lucrative manner. Don't let your business suffer due to poor money management. Keep the above tips in mind and give your venture a bright future.

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