It is no mystery that running a small business has its fair share of challenges. The myriad of tasks that a business owner must perform in a single day can include seeking potential customers, keep spending under budget, keeping customers happy, as well as keeping your employees happy. It’s only natural that the stressed and time-starved business owner would rather shy away from analyzing and managing the financial health of their organization.
However, not managing your finances will spell disaster for your small business.
Here are eight tips to get you motivated to stay on top of your small business finances.
- Develop A Plan
Writing a business plan is essentially a roadmap to guide your decisions and to ensure that you are meeting your financial goals. If it gets written down, it gets done. In this document, you can also include budgets, financial targets, and cash flow forecasts.
- Know Your Financial Position
Keep a watchful eye on your bank account. It’s easier than ever to stay connected by signing up for online banking or downloading an app on your phone. You should be fully aware of how much is in your account on a daily basis and how much you are expecting to come in.
- Comply With Tax Deadlines
Nothing drains your funds faster than missing a tax deadline, only to have incurred outrageous fines and corresponding interest. Secure a knowledgeable accountant to help you stay on track and on time.
- Improve Your Billing Strategy
Have a chronically-late paying customer? Change the terms. Indicate on the invoice the following, “2/10 net 30”. This means if the customer pays the invoice within 10 days, they receive a 2 percent discount off the total bill. If not, payment in full is due in 30 days.
- Don’t Overpay For Your Financial Services
Banks are notorious for overcharging small business owners for business account services such as making check payments, withdrawals, transfers, and telephone banking services. If the charges seem high, they probably are. Challenge them on these costs or shop around for other banks.
- Get Frugal
Always stop and ask yourself if you are operating your business as efficiently as possible. Take a look at your current bills and see where you can cut down and save. See how you can save using gas, electricity, water, and raw materials.
- Cash Reigns
Although profit is important, there is nothing more important than having enough cash to keep operations going. Determine how much your business needs to run every month, like rent, salaries, etc., and make sure your account has that amount.
- Don’t Stick Your Head In The Sand
When it comes to running your small business, ignorance is not bliss. As painful as it is to face the financial challenges that have or will plague your business, action and not inaction is key to the survival of your operation.
It’s understandable that you as a small business owner enjoy doing the parts of the work you do best, whether it’s creating a successful product, promoting it, or delivering fantastic customer service. However, if you are in this for the long-haul, the survival of your business is greatly dependent on your financial education, monitoring, and making sound financial decisions to ensure your business has a stable financial future.