It doesn’t matter how successful or great your business is, if you’re not properly managing accounting and finance, you putting your business at risk.
Healthy financial habits a must for all business owners and a regular ‘health check’ required even if you think everything is in working order, tweaking the system for improved efficiency will improve the bottom line.
As a small business owner, you have a lot of responsibilities to manage. Perhaps the most important task you have to attend to is managing finances. This can feel like an overwhelming task, one you might not want to attend to, but, if you do nothing else, stay on top of your organization’s finances.
If you’re feeling clueless about money management, here are few helpful tips for your startup or small business.
101 Money Management in 2019
Your company’s finances have different components, some of which can be managed less frequently than others. Look at all the financial tasks you need to attend to and then determine which ones can be handled less often. Start from the beginning.
Always pay yourself first
After handling all of the duties that come with running a company, small business owners frequently forget to pay themselves. By paying yourself, you’re effectively budgeting out that allotment, helping to ensure that your personal and business finances are on the right track.
Stay ahead of day-to-day tasks
Tasks like invoicing can often get put on the back burner, leading them to pile up. Send out invoices right away and follow up on payment. You will also want to properly manage accounting, whether investing in software, or outsourcing the task entirely. Doing this can also give you a realistic idea of costs, and areas of overspend.
Develop a good billing strategy
Unpaid invoices can be lead to cash flow problems, so it’s important to develop a strategy to decide how you will deal with invoicing. You might want to offer a discount for customers who pay in full, or change their payment terms if they’re having trouble paying their bill.
Keep an eye on your books
Looking at your books regularly can help identify any impropriety that might be occurring, or areas of spending that you need to monitor more closely.
Spread out tax payments
It may make more financial sense to make monthly tax payments, instead of quarterly ones. By making monthly payments, you can account for this in your regular monthly business expenses.
Investigate return on investments
Just as important as tracking expenditures is paying attention to the return you’re getting on your investments. This can show you which investments are bad or ones that will lose money.
Planning ahead is quite possibly the most important thing you can do as a business owner.
Always be looking ahead to stay on top of problems before they start. It’s never too early to start thinking about the future. Save as much as possible and be sure to continue investing in your business. Good habits now mean best practices later.
Failure to keep on top of business expenditures, and to keep an eye on money in vs. money out can spell trouble for any business, and none more so than startups.
Financial mismanagement can lead to insolvency, requiring the business owner to declare bankruptcy, which may tip you personally into bankruptcy. See this article on chapter 7 bankruptcy by Jason P Provinzano. If it comes to this, you’ll have no choice but to engage a bankruptcy lawyer, to get you the best outcome. However prevention is far better, so to prevent the worst from happening develop good money habits and practices now so your business can grow and prosper for years to come.