One of the most important aspects of running a business, large or small, is ‘number crunching’, also known as finance and accounting.
Businesses that invest in an in-house team dedicated to managing their company’s finances, budgets, taxes, and accounting can make more informed decisions on where to invest and grow.
With tighter margins, robust financial management processes are critical for the survival of any business in any industry today.
Startups often attempt to operate with no working capital or contingency funding. Without it, they are vulnerable to volatile trading conditions where their operations may come to a halt.
Budgeting is also another aspect that’s often overlooked by new businesses, and that’s why poor management of accounting and finances sends eight out of ten businesses to the wall within the first year.
However, entrepreneurs with more experience know they can invest in recruiting a team of accounting professionals and commit to further training and financial education in management.
Preventing insolvency and bankruptcy is key to what comes next in an entrepreneur’s career.
Financial Management Tips
While the basics of financial management are not readily part of compulsory learning for students, there is a lot of information available when you search online. Use the following tips to get your startup or SME in sound financial working order.
Always separate personal finances from the business finances
Linking personal credit cards and bank accounts to the business is a terrible idea. Keep them separated. Open up a business account, and carry business-specific credit cards for all charges accrued by the organization.
It is also a good idea to open a savings account for the business. Emergencies always happen at one point or another and tend to cost money. Weaving personal finances into the business finances can get quite hairy and should be avoided.
It helps to run a thrifty organization
Running a “lean” organization will pay off when all is said and done.
Fixed costs are those expenses that cannot be avoided or acquired at a less expensive price. However, you can negotiate your fixed costs and choose the most competitive service for your workplace, technology, sales, and marketing campaigns.
Reduce your workplace expenses
The pandemic was a wake-up call to businesses unable to operate with their staff working remotely.
Once they fast-tracked their digital adoption to use subscription services to manage cash flow and provide secure remote access, businesses also realized they didn’t need the premium ample office space.
Downsize to a smaller commercial workplace and embrace the other benefits of remote working.
Cloud-based accounting software is well worth the investment
There are a lot of cloud-based subscription software platforms for accounting, payroll, and financial management.
The convenience of cloud-based access cannot be matched. Web-based financial software provides real-time insights, tracking, and updates for businesses of all shapes and sizes. Conveniently work on financial documents from anywhere at any time with various mobile devices.
Proper performance monitoring is helpful
A lack of proper performance monitoring can lead to huge financial loses and holes in the company’s reporting. It is critical to maintaining a watchful eye over all the ins and outs of the business’s financial dealings.
Proper performance and financial documentation can provide a more accurate picture of what is and is not working for the business. The ebb and flow of finances will help owners make more practical financial decisions for the future.
Hiring the best of the best
Hiring the most competent professionals in their field will build the most functional and capable business team. Take the time to vet out just the right talent for the organization.
Today there are many more ways to reduce costs to cope with inflation and manage the business more efficiently.
Technology aids startups with less initial outlay to use the same apps and systems to compete for customers. Overgrowing and generating a healthy contingency fund for emergencies is just one reason to invest in a team of accounting and finance experts for your new business.