It should go without saying that you should have a separate credit card and/or checking account for your small business. That way, you can track all company-based expenses so you don’t need to sort through countless other bank statements. While that should go without saying, here are several more tips you can use in order to manage your small business finances.
Make sure you know all of the different aspects of financial statements. Know where your money came from, how many hands it changed, and where the money is now. The four main essentials of a a financial statement is the cash flow, income report, balance sheet, and the statement of the shareholder’s equity.
Secondly, cut costs whenever you can. You want to keep profits high (that’s a given), but one of the easiest ways to do this is to use an open source software that is not going to cost you any money. Branded software might be something to jump to as more clients roll in, but often open-source software has a dedicated community and plenty to offer the start-up entrepreneur.
Additionally, no one wants to waste their time, so instead of traveling long distances, which can be very costly, conduct free online calls when you can.
Set Strict Payments
We’ve already discussed that you should have a separate credit card and checking account for your business. However, one thing you don’t want is to be making payments on the client’s behalf, say for an advertising budget, and be dependent on their payment to avoid incurring late fees. Set expectations with the client and ensure you have enough money to avoid a late payment.
Full disclosure, when a contractor tells me their invoice is “net 10,” I go with someone else. Net 30 is fairly common practice and won’t rub your clients the wrong way.
The fourth tip is to make sure that you invest some money in the accounting software that is cloud based. This is because you will be able to have real time insights about your company. These insights will allow you to update, store, access, and track your data no matter where in the world you are. You can be at home, inside of the office, or traveling and you will still be able to get access to the data that you need without having to worry about any type of hassles.
Keep an eye on the financial performance of the company and compare it to the financial statements in the past so that you can project the future revenue, cash flow, and expenses. This is the best way to make informed decisions about the business.
The sixth tip is to hire professional help. Everyone is going to need help especially when you’re first starting out. Therefore, if you are wanting your business to be successful, then you will need to get the services of an expert. They can help you to make the best decisions for your business as far as where the business is headed, looking at your data and analyzing it thoroughly.