Infotipsnews.com – 9 Essential Steps to Manage Small Business Finances. How to manage small business finances really determines the success of your business. However, many people fail because they aren’t aware of the importance of good financial management. In addition, there are still many people who mix personal and business transaction funds.
Therefore, before you jump directly into the business world, you should first understand the strategy for managing small business finances well. So, your business can be stable and even grow rapidly. Here are some ways to manage small business finances that you can follow.
Here are the nine ways to manage small business finances that you can apply to various business fields, such as culinary or fashion. Make sure you follow these steps to keep your business running smoothly.
Understand Good Business Management
When starting a new business, you need to understand business management well. The trick is learning how to read financial statements correctly to conclude the steps you will take. For a start-up business, consider the profit per month that you will receive.
If the profit is still small, then you don’t need to force hiring employees. Just do it yourself and make sure you pay yourself to compensate. It’s also a good idea to save some of your income like other monthly operating costs to ease your tax payments per year.
Monitor Business Financial Cash Flow
How to manage money in a small business that you can apply is monitoring financial cash flow. The goal is to monitor how the business is progressing and avoid leakage of cash data. Cash flow in small businesses is usually calculated monthly, but there are also those who apply it every day to minimize errors.
Supervising cash flow is not easy because it requires high accuracy and an understanding of the basics of accounting. The main thing to note, you must be able to distinguish between incoming and outgoing funds to determine how much income you receive.
Get Financial Sources from Various Parties
Did you know that the majority of large companies also started as small businesses? Well, in order to grow the business, the main key lies in the source of business finance. Apart from personal funds, business capital can be obtained from various parties.
One of them, you can raise funds from venture capital companies that are specifically engaged in providing investment assistance in exchange for equity shares. Making a loan at a bank can also be done with mutually agreed terms and interest rates. Don’t forget to set aside some of your operating profit to increase your financial capital.
Have a Good Billing Strategy
In some businesses, it may be possible to manage small business finances by giving customers the opportunity to get into debt. However, to keep your business running smoothly, you must have a good billing strategy. For example, if there are customers who are due to pay, then you have to remind them.
Well, if you still have trouble collecting it, then you can create it in other ways. For example, you can give them a discount so they are excited to pay it and still consider the profit you receive. However, as much as possible you had better avoid paying with a debt system because this is very risky for a new business being started.
Create a Book of Financial Statements
The financial statement book is needed as a history of incoming and outgoing transactions, as well as capital and accounts payable. This book should be made as detailed and neat as possible to make it easier to understand. You can sort them by transaction date and time. If you find it difficult, then there is nothing wrong with hiring an accountant who is an expert in his field.
You may also consider managing your small business finances by investing in Cloud Accounting software. That way it will be easier for you to record expenses and income, as well as business debts and receivables. Some examples of popular applications, such as Xero, QuickBooks, and FreeAgent.
Separate Company Funds and Personal Funds
One way to understand your business finances is to separate company funds and personal funds. Because, some small businesses such as culinary are very prone to financial mergers. The worst one of all, you will not be able to calculate the company’s profit and loss, and will eventually fail in your business.
If you don’t want this to happen, you can separate the two funds by creating a different account. So, when you need personal funds, don’t use business cash.
Manage Accounts Payable According to Ability
Managing small business finances can be done by adjusting the nominal business debt according to ability. Debt for business purposes is not always bad, as long as you have the right planning in using the money. Also make sure you are not in arrears on bill financing because you are at risk of fines or increased interest rates.
Another solution, if you want to minimize debt, can be done by setting aside some of your income as an emergency fund. These funds should be used wisely to deal with unexpected losses. Also try to negotiate with suppliers to reduce costs through discounts and so on.
Manage Business on Google
Managing a business on Google can be the right alternative to attract many consumers. If the target is young people who tend to use social media, then you can use this approach to promote.
Alternatively, you can manage your business profile via Google Maps to let others know about your business’ location information, opening hours, and ratings. The registration process is also very easy and you don’t need to spend extra money.
Make Future Plans
Another way to manage small business finances that is no less important is to make plans for the future. To help you plan a business, you can start by doing research related to the target market and the capital that must be prepared.
You also have to identify the type of business you are in and what goals you want to achieve in the future. Professional entrepreneurs always present creative products according to the needs of today’s consumers. On the other hand, entrepreneurs who cannot make plans for at least the next 5 years will be increasingly less competitive.
By practicing how to manage small business finances above, it is very likely that the business you are running will continue to grow. Of course, all of this must also be accompanied by a steadfast determination and never give up in the face of all business obstacles.
