You might think that running a small business is easy, but since you are just starting up and do not have the right ropes and method to adhere to, it might prove to be more of a challenge. Business and finance go hand in hand, and a successful business is the fruit of properly managed funds and marketing techniques.
If you’re a starting entrepreneur, be prepared to handle not only the consumer side of the business but also the financial management so your business can thrive. Here are some tips to consider:
- Create a budget plan
Managing a business is like managing a home, you need to have a definite list of necessities and a fixed budget to have better control of expenses. The key to effectively spending is preparing a detailed and realistic budget plan, this will help you determine your target income and how much you can spend on miscellaneous items. By making a budget plan you are able to understand the pattern of your business and which items you can further spend on.
- Separate your personal expenses
Just because you earned money, does not mean you should spend it. Do not treat your business as a piggybank or a savings account. Business owners have a tendency of upgrading their lifestyles once there is an increase in sales, this is fine if the money you spent came from your monthly allowance and not from the profits of the business. A startup business is susceptible to loop holes or unforeseen events, and so it is important to always treat it as an investment and not as an ATM account.
- Create a separate account
Managing your expenses is easier if there’s a separate account specifically for the business itself. This will not only keep better track of the income and expenses of the business, but will also make it easier for you in filing taxes and checking if you are still earning. When small proprietors use their own accounts for business purchases, it gets harder to really see if the business is still thriving or not. Be as organized as you can and it will save you the hassle of having to sort out through receipts and paper works.
- Keep track of your accounts payable and accounts receivable
Accounts payable are amounts your business owes to suppliers as payment for services or products purchased, while accounts receivable are amounts your business can collect because of any service or product given. To be effective in financial management, make sure to constantly check and balance these two. Pay your debts in time, and make an effort to collect payment from consumers that owe you.
- Work with an accountant
Hiring an accountant is your best investment in growing a business. You can try to DIY your account management, but a professional can find ways in which you can pay lower taxes and maximize your income. Make it a monthly habit to have an accountant check your records so that there’s less paper work to manage and sort.
Do not be afraid to try and venture to the financial side of the business, start early and get the right approach in managing your business. It will take time and effort, but keeping things in check at an early stage will help your business grow effectively.