Starting a business comes with a long list of challenges, and a large percentage of them revolve around finances. It can be hard to know exactly how to handle your cash flow, loans, and bookkeeping, especially when you are just starting out. Once your small business starts to grow, that brings a whole new set of concerns and questions. Don’t let a lack of knowledge about the financial ins and outs of owning a business stop you from growing your brand the way you want. Listed below are 5 tips for managing the finances of your venture.
Tip #1: Plan, Plan, Plan
A young business can thrive or fail based almost entirely on planning. A lack of realistic planning is actually one of the most common mistakes made in small businesses. It is imperative that, after careful consideration, you plan a budget. No one expects you to be a fortune teller, but the better you can budget your spending the better prepared you will be in the long run. Along with this you should also set timelines and projections, but take a very critical look and make sure the goals you are making for yourself are actually achievable. Remember, when it comes to pay off after growth, it could take a little while to see a return.
Tip #2: Business Vs. Personal
This is particularly tricky for those who have yet to hire any employees and work on their own. As hard as it may be, owners should try and keep their personal finances and business finances as separate as possible. To achieve this, you can create a separate business bank account, and also open a credit card just for the business.
The business world can be fickle, and you should always be saving for a rainy day. Make it a top priority to set yourself up with an emergency fund of sorts by putting aside a certain amount in a savings account, and add to it as often as possible.
Tip #3: Get an Accountant
Pinching pennies is a great idea for new businesses, but cutting some corners will end up costing you in the long run. It is ultimately worth it to hire an accountant. Remember, these are people who specialize in dealing with financial matters. They could help prevent you from overpaying on your taxes, or missing deductions you could have claimed. They will almost definitely keep better records than you, and in the end it frees you up to concentrate on building your company in other ways.
Filing taxes, handling insurance, and keeping perfect records can send a lot of small business owners running in fear, but you can relax knowing you have someone handling it who really knows what they are doing.
Tip #4: Invest In You
The old phrase, “You have to spend money to make money”, has actually proven to be fairly true. Along with it being a good idea to allocate some of your budget to hiring help with money management and taxes, you should also be putting money into new equipment and technologies. Consider it as you investing into your own company. Fast or slow, as long as you are continuing to grow, you are guaranteed to make the money back.
Tip #5: Reevaluate Your Needs
Like a lot of things in life, you don’t really know what exactly something will be like, or what you will need, until you start. Taking the time to go over the different aspects of how your business is running, and how your money situation is truly panning out, can end up not only being profitable but also possibly help you avoid a future headache. Things you should be looking into are: how your industry is doing as a whole, the possibility you may need more capital, and what are the risks involved with any of your future plans.
Claire Bridges is a regular contributor to Champion Accountants online social discussions and blog.