Running a small business isn’t easy, especially as you’ll be needing to take on a lot of the work yourself. Things you might not have had to consider before such as the marketing and people management could be completely alien to you. One of the biggest challenges you might face is dealing with the money side of things. Think you’re up to the challenge? Here are four ways you can be smart with your business’ finances.
1. Analyse your finances often
Big businesses base their finances around the fiscal year, which is great for them and their accounting teams but not always ideal for small businesses. For small businesses, it makes sense to analyse your accounts monthly. If you lack the expertise in managing your accounts, take a look at the best accounting software for small businesses that could give you a helping hand.
Being able to work out where your successes and failures are at a closer level will mean that you can avert long-term problems and make appropriate forecasts for the coming year.
2. Separate your business and personal finance
Many people who run a small business do this as a contractor for hire or as a small company that doesn’t have its own accounts. It’ll be a good move for you to open a separate account and to manage your personal finances elsewhere. If you pay yourself a salary from your business’ profits, make sure that you do so as a regular transaction.
Keep all other money in your business account to cover bills and expenses. This will help you to manage your year-end accounts better and stop any overlaps between your two areas of finance.
3. Have contingency plans
It doesn’t hurt to have some funds set aside in case your business runs into trouble. When your business is doing well, you should put some aside as a way to ensure you’re covered should anything go wrong. You might want to invest some of your profits as a way to generate further income, and you can click here for more information about the types of investments available to you.
If you foresee serious financial issues, you should make an appointment with your bank manager and see if they can recommend solutions to ease financial problems in the short-term while things resolve themselves.
4. Be frugal
If you were to need money for personal purchases, what would you do? Realistically, you would find ways to budget and make cuts that will help to free up additional money and help make those savings. You should apply the same principles to your business. If you can find ways to be frugal with your business, do it. Ways your business can be frugal include cutting out unnecessary software costs and adopting greener policies in the workplace. It may take some sacrifices, but it can be done.
Managing your business’ finances is a key part of keeping it afloat and making it a success. For further advice on making your business run like a fine-tuned machine, even when you’re not there, read this great article for advice. Getting help from others will make you a better business owner and help you learn from their mistakes.