If you’re asking this question, I can imagine you feel as though you’re in dire straits. It’s difficult enough to create a sustainable business, let alone grow while you feel as though your expenses are outweighing your profits. Capital and cash always top the list on every entrepreneur’s priorities. However, you can bring your company a financial improvement by changing your operational methods in place, but there are also some easy things you can do to increase your profitability and savings in the day-to-day management of your business.
Do not mix business and personal finances
First, do not mix your personal account with your business account. There’s myriad reasons why you shouldn’t, but the most important being taxes as this increases personal liability and clutters your accounting records. No matter how tight money gets, fight the impulse to cover your company funds with personal funds because it’ll only make matters worse.
Creating a personal reserve fund and a business budget is the best way to maintain a consistent division of your expenditures. Rigorously adhere to both of them in order to avoid using loans and credit cards for your company or yourself. If you aren’t already doing this it could be the reason you have been bleeding money lately.
Get out of debt
Next, avoid or get out of debt. Whether it’s debt on credit cards, your mortgage, or perhaps even late payment charges on retailer invoices. Take the time to thoroughly review all of the current debt payments to find ways to get those debts paid and off your table. When you have a high interest small business loan, or even a average rate, pursue ways of refinancing and consolidating certain loans into a lower interest alternative.
Stay on target with bills and deadlines
It’s essential that you pay all your business bills on time, the same as you do with your household finances. Credit card and late payment for mortgages can be expensive, and add up, to say nothing of late payment charges on retailer or utility bills. The same happens for taxes: paying too late could lead to severe penalties.
Always guarantee there are no company payments slipping through the cracks, set up regular reminders. In general, the profit-loss ratios are small for young companies. The disparity between the end of the year in the red or in the black could be to prevent late fees.
Invest in an accounting class (even an introductory one)
A class isn’t going to make you an expert, but it’ll help you understand the basics of company accounting, even if you employ an accountant or work with a bookkeeper. If you can, take an introduction to accounting class online or at your local college and learn how cash flows into and out of your business.
The more you know your company operations and cash flow, the more you will be ready to make decisions on institutional money management. And while these guidelines get you going, nothing is a replacement for being constructive and hands-on when it comes to managing your money.