While there are many different challenges when starting and managing a small business, money concerns are included in the list of most small business owners.
There are many ways to give your business financial improvements by modifying your operating process, but there are also some easy things you can do in managing your business everyday to improve your finances.
These tips are practical, everyday actions you can do to manage your money more effectively.
1. Do not mix business and personal affairs
There are many reasons not to confuse your business and personal accounts, including tax issues, personal liability, and mixed accounting records, just to name a few. As circumstances get tighter, resist the desire to secure your business finances with personal funds because it will inevitably lead to clutter that you must face later.
The best way to keep your split apart clearly is to set your personal budget and business budget. Obey them strictly and separately so that credit cards and loans for your business are unfamiliar with your personal finances and vice versa. Your bookkeeping and accountant will be grateful for not muddying the water money when it comes time to manage your books and pay your taxes.
2. Negotiate with the vendor before signing the contract
Sometimes you have to dig a bit for a good bargain. When making a purchase from a vendor or contract with a supplier, try negotiating for a better deal.
Do not forget to check the terms of purchase such as late payment penalties and grace period when making a decision. Sometimes given 30 extra days to pay can save more than 5% off from above.
3. Pay your bills on time, at any time
Just like you do with your personal finances, it’s important that you pay all your business bills diligently.
Credit cards and loan payments, late fees can cost a lot, but paying a small late fee for vendor and utility bills consistently increases. The same goes for taxes: paying late can lead to serious fines.
Set up a monthly reminder to make sure there are no business bills falling through the gap. For the young business in particular, the profit margin is thin. Avoiding the cost delay could be the difference between the end of the year in red or black.
4. Make frugality a habit.
You do not have to turn yourself into an extreme coupon to save on ordinary business expenses. Follow offers for office equipment and equipment, buy used furniture and equipment.
5. Take the time to refresh the accounting
Being a small business owner does not automatically make you a whiz with money, but you still have to make big money-related decisions for your company. So even if you hire a bookkeeper or work with an accountant, you need to know the basics of business accounting. Take an introductory accounting course online or in your community college if you need to, and learn how money moves in and out of your small business.
The more you understand your business finances and your cash flow, the better prepared you make smart money management decisions. And while these tips will help you get started, nobody can be proactive and hands-on when it comes to managing your money-no matter how big or small the financial challenge is.