Running a business is not all about building a wildly successful brand. The end goal is to provide you and your family with the income needed to live a comfortable life. To grow your business, you will need to keep a close tab on your financials. Money management or financial management helps business owners learn about wise decision making and taking risks. The good news is that you don’t need to be a financial expert to learn the secrets of managing money. Here are some of our best tips for new entrepreneurs.
- Set clear financial goals: While your primary goal is always to make more money, there’s more to it than just increasing sales. Be more specific. For instance, some important goals are “decrease costs,” “improve margins,” “reduce debt,” and “budget cash flow.”
- Separate Your Business and Personal Expenses: Your personal and business money should be kept separate at all times. This will eliminate situations of potential money crunch in business because of withdrawals for personal expenditures. When you start a business, make sure you open a separate bank account for the company. And if your business is your main source of income, consider paying yourself a salary to cover your personal expenses.
- Emergency Fund: An emergency fund is designed to cover a financial shortfall when an unexpected expense crops up. Much like a personal emergency fund, your business emergency fund should be enough to cover three months to a year’s worth of expenses.
- Hire a financial advisor to help you establish goals and find financial products that help you maximize and grow your assets, but you also need to be able to read the numbers. Financial education is the key to managing your funds.
- Set Up a Retirement Account: The retirement plan will not only help you with your future plans, but it will also attract talented customers. Start by investing some part of your income to fund your retirement and save your time.
- Use Technology and its services: You can use bookkeeping software for paying taxes and for understanding the financial position of your business and developing budgets.
- Don’t overspend in the name of investment: Review your current budget and tax obligations to determine how much you can spend on expenses like personal development, coaching, marketing, and networking. Keep in mind that no matter how good something sounds, if it isn’t going to make you money or won’t lead to warm prospects, and/or is a portion of time you could use for other business building activities, it may not be worth it.
- Protect Your Business against Fraud: Every business needs to pay close attention to cyber security when leveraging technology, e-commerce platforms and electronic payments. You need to make a point to regularly update your anti-virus software and firewall to ensure that your data and your clients’ data are protected.
- Manage Your Debts: Carrying over the debts of the current year to the next financial year is never good for a business. It’s best to make a well thought out strategy for the repayment of debts before you take loans. It’s also important to make it a priority to pay off any outstanding business payments, quickly and efficiently.