There is no doubt that whenever someone starts a business, the one huge, looming thing on all their minds will of course be money. The art of managing business finances is one that requires a lot of patience and strategising. Proper financial management is absolutely crucial to surviving an economy that is volatile and also to make sure that you reiterate fast enough to stay on top of industry competition.
Smaller businesses should be a lot more wary about their finances from the get go. This is because, the case for smaller businesses or startups even – is that money is a problem. Even if a startup or a smaller business is funded by VC’s, they need to be smart about handling their finances. Make a few wrong calls and they will watch those millions flow down the drain.
Having a valid financial structure that can bring about profits is needed to ensure that the company stays afloat. Business owners need to be fully equipped with money management abilities to ensure that their business succeeds in the long run.
Here are some of the tips we put together for you to better manage your small business finances :
This might seem like a very straightforward piece of advice to start with, however a lot of business owners do not make this a priority as they think that they can wing it and work on it simultaneously with the rest of their company. But, that is one of the biggest mistakes that one can make. You need to learn how to read and perhaps also create financial statements. These statements will be your backbone for your finance team as it tells you all you need to know about your money – these statements show where your money came from, how many people it has gone through and exactly where it is.
These statements should contain 4 essential details :
- Cash flow statements
- Income statements
- A balance sheet
- Shareholder equity
As you can see, this document shows you everything from the sales of your business, to who holds the shares in the company.
2. Please Do Not Procrastinate
This goes along with our piece of advice which is educating yourself. Procrastinating and putting off something as important as bookkeeping needs will cause trouble for you in the future. If you put off the accounting work, it really does not go away but rather it will start piling up and you will soon have a mountain of paperwork to deal with. The bigger the mess, the longer it takes to get it sorted and you will be more likely to procrastinate more then as well!
The easiest way to get over these is to compartmentalise and put things in their own space. Break things down and sort them. Sort expenses into different categories like monthly employee wages, monthly employee claims, office rent and invoices. Things become a lot more manageable this way.
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3. Separate Business and Personal Finances
If you are the CEO or co-founder of a company, it might seem that you will want to pump in your own money into the business and might take money out since the banking accounts are all in your name. You need to make sure that this is kept separate. Get a business account, register for a company credit card. Ensure that you are aware that the finances need to be separate whenever you can. Make sure that you keep track and file all the transactions in and out for tax filing purposes!
One day, when your business becomes successful and you will start making money from a lot of places, you will need someone that is dedicated to ensuring your finances stay proper. Sometimes, it really does pay off to hire and expert rather than take everything on, on your own. Using that kind of focus on something else that you’re great at in your business will prove to be a better use of your time. This expert does not need to be working for you on a full time basis. You just need them to come in once in a while to look at your numbers, make sure everything is good and give you a report at the end of the day. They can also help you with advice on making you spend your money better.
Finances is something hard and nerve-wrecking to think about especially if it’s your own company. We believe that here at ConsultU, we are able to provide certified professionals who are at the top of their game to help you get everything sorted the right way. If you are in need of a financial consultant, head on over to ConsultU to start your process today!