Managing Business Finances for Business Stability
One of the greatest reasons so many businesses fail in their first few years? Cash-flow and operational management issues. It doesn’t matter how much expertise you have in a field, your talent or the brilliance of your idea, if you don’t manage your business’ finances well, your dreams of fulltime entrepreneurship will hit a brick wall.
Here are some tips that are necessary for setting the foundation for strong financial growth.
Establish Business Checking and Savings Accounts
Early on in your business, establish business accounts that are completely separate from your personal accounts. Your business is a separate entity from your personal life and should be treated as such. If you are being sued, for instance, and the courts find that you mixed your personal and business finances, they can seize your personal funds to fulfill judgement.
By establishing business accounts you are building credibility with customers and vendors who want to do business with you.
Manage Your Cash Flow
If you want your business to do more than just run, you’ve got to manage your cash flow wisely. Running out of money is a sign that you’ll be closing up shop sooner than later. If you don’t want to close your business, it’s best to figure out where the money is coming from in your business and where it is going.
Check This Out: Six Ways to Improve Your Business’ Cash Flow
Build Your Customer Base
If you have no one to sell your service or product to, you don’t have a business. It’s just that simple. One of the keys to managing your incoming cash-flow is by constantly working to acquire new customers and retain existing clients. If you’re a service-provider, constantly network with others to share what you do. If you produce a product, don’t just rely on your social media followers. Go out and market to new groups.
Set Revenue Goals
How much money do you want to make in your business? How do you want to make this money? Everyday that you are running your business, there should be a financial goal in place that can be achieved.
If you want your business to grow, you’ve got to analyze how you are generating revenue so that you can fulfill your ultimate vision.
Monitor Business Spending
Business expenses are a part of doing business. There is no way possible that you can run a business without relying on an outside vendor or marketing your business. But you’ve got to know where your money is going and why.
Establish a budget for your business and be prudent. Your business’ financial health weighs heavily on your ability to not overspend or use too much credit.
Use an accounting software such as Quickbooks to remain organized. An accounting software will help you manage your funds and remain organized for tax season.
If you have a more complex business, consider hiring an accountant to track and monitor your business spending.
Keep Your Fixed Expenses Low
It would be nice to take all of your clients out to lunch or dinner to celebrate wins. It would be great to splurge on a private office at the local coworking space versus toiling away next to three other solopreneurs.
But guess what? It’s better to keep expenses low and your profits high so that one day you can get exactly what you want.
Making and retaining should be the number one priority of any business–not the shiny toys that make your business look good.
Check This Out: The Golden Rule to Startup Capital: Don’t Waste Money
Save Your Money
As an entrepreneur, you have to prepare for rainy days. Create an emergency savings account for your business because things happens when they are least expected. They key is you want to be ready for whatever comes your way. As an entrepreneur, you have no control over equipment breaking or global pandemics. You can, however, control how you’re able to stay afloat in your business.
Prepare For Retirement
In addition to saving for rainy days, preparing for retirement is key. If you’re a fulltime entrepreneur there is no 401K to rely on from a job. Research retirement options such as a Roth IRA or Simple K so that when it’s time, you can relax and enjoy your life.
Take An Owner’s Draw
Make sure that you’re paying yourself. You’re putting lots of hard work into making your business idea a long-lasting reality. The purpose of being an entrepreneur is to be able to live off of your work. So make sure that once all the bills are paid and the money is saved, you pay yourself for all of your hard work.
If you want your business to thrive, it’s going to take more than hard work and sharing your value. You’ve got to dedicate your time to managing your business’ finances so that you can be ready for growth and new opportunities.