When it comes to running a business, we’re all doing it for one sole purpose – to make money! After all, a healthy cashflow is what will keep your operation turning and keeping everything afloat. While some business owners are excellent at financial management, others aren’t quite equipped at handling money. If you fall into the latter, understanding money management is a key part of business success that can help drive your venture forward.
Improving your financial management today can yield brilliant results for your business, both in terms of saving and making money. To help get you started, here are some money management tips you can implement into your operation today.
Have An Accurate Business Plan
This may sound like an obvious tip, but you’ll be surprised how many business owners cut corners when it comes to devising a business plan. If you’ve got an idea that you cannot wait to share with the world, you need to be patient and take your time when crafting your business plan, especially when it comes to the money side of things. Your business plan should outline how you’ll finance your operation, its activities, what money you’ll need, and where it will come from. Again, don’t rush this process. You need to come out at the other end knowing you’ve got a robust financial plan in place that you can stick to.
Create and Stick to a Budget
Part of having a realistic business plan is having a budget in place. For many people, the word ‘budget’ alone is enough to roll your eyes. While budgets aren’t very exciting or fun to most of us, they’re important for staying within your means and not overspending. Make sure you create a realistic, measurable budget and map out your projected cash flow. These are fundamental parts of a business plan that cannot be looked over or ignored. Once you’ve created a budget, do your very best to stick to it. The last thing you want is to fall into debt because you’ve taken your eye off the ball.
Another money management tip that may sound straightforward is reducing costs. However, this can be hard to achieve. If you haven’t got a sole grasp of your entire business operation, you may struggle to pinpoint areas where you can save. For instance, many consumers pay by credit card. And as you’ll be aware, there are credit card processing fees in place. To ensure you don’t foot the bill, consider using Nadapayments who provide a surcharge program. They can take you through the process and give you excellent advice on ways to save money for your company, as well as how to handle transactions better.
Stay on Top of Deadlines
If you aren’t sure when your bills are due, like accounts payable, credit card payments, or business loan payments, you may not have enough money on hand to pay them. What’s more, failing to know when bills are due can result in late fees or added interest. There’s also the risk of your business credit lowering and souring relationships with lenders and vendors. Of course, you don’t want this to happen, so you must stay on top of deadlines and be fully aware of what needs to be paid and when. If you keep paying bills and invoices on time, this will boost your business reputation and help you gain respect and credibility.
Are you aware of how much money you’re spending per day, week, or month? If the answer is no, you can’t be shocked if you fall into debt! You don’t want to be racking up bills, so now is the time to start monitoring your day-to-day spending. Most business heads have several accounts, like a checking account, credit card account, and savings account. Make sure you know how much you’re withdrawing and spending from each account. Doing so will keep you on top of your account balances. It’s very easy to use your business debit card or credit card without even realizing it. Whether it’s a light lunch for the staff or a new coffee machine for your staff room, these small expenses soon add up to a bigger figure. Therefore, keeping a close eye on your spending will minimize the risk of you splurging on unnecessary things.
Separate Personal and Business Funds
Have you got a separate bank account primarily for business? If not, it’s time to do so. Even if you are not required to separate personal and business funds, doing so is a must for money management. Business bank statements are great for tracking profitability, looking over your books, and of course, monitoring spending. Should you mix business and personal funds, this can cause chaos and lead to overspending. The best thing you can do is set up separate accounts so you’re fully in control of where your money is and what you’re spending.
Don’t Forget to Save
There’s a reason why business owners put money away for a rainy day. Problems can arise out of nowhere and wreak havoc on your company. But, if you’ve got an emergency fund in place, this should offer some relief that you can cover costs for the time being. You can never be certain what the future holds, even if things are going well right now. Should there be a decline in sales and profits, knowing you’ve got an emergency fund to tap into can take the weight off your shoulders. This money can be used to pay employees’ wages for instance. When money is sitting in your business bank account, don’t feel like you’ve got to spend it! When you start saving, you’ll have protection in place.
No business owner wants to be strapped for cash. However, mismanaging cash flow does occur and can result in serious consequences for your business. If you are struggling to keep on top of your small business funds, checking out the money management tips above and putting them into action can be a tremendous help and keep everything ticking along nicely.