5 Tips for Managing Business Finances for a Growing Startup
One of the leading drivers of growth and success for small businesses is effectively and efficiently managing finances; inflow(revenue) and outflow(expenses)—cash flow management. As I always say in most of my previous posts, if you do not know how to go about cash flow management, and especially if you don’t have the time, outsource it!
Hire a professional accountant or bookkeeper. However, if you do not have the resources to hire a professional, there are numerous financial and bookkeeping software and online platforms that you can take advantage of. This will enable you to monitor your cash flow and generate analysis and insights for decision making towards minimizing your losses and maximizing your profits. In this article, we will consider 5 tips to manage business finances for a small business.
Create a budget using your business’s regular or estimated expenses to determine how much income your business needs to generate and how much of it needs to be spent. This is very essential if you want to be on top of your cash flow and if you want your business to grow. You may need to create a worse-case and best-case versions of your budget so you can switch if things are going either north or south. Once this is done, the budget, if adhered will guide you towards growing your business such as expansion, creating more ads or hiring more hands. If you need an online resource for managing your business finances, try Mint.
— Rea & Associates (@ReaCPA) November 25, 2017
You must remember that the business is a different entity from you. Try as much as possible to separate yourself from your business. If you’re running a sole proprietorship, you still have to make sure you keep your business financial transactions separate from your personal financial transactions. This is especially for audit reasons, even if you have to take money from your business, it has to be done professionally and classified as a draw in your financial books and must first be transferred to your personal bank account before use.
— Spectrem Group (@SpectremGroup) September 22, 2017
Customers want the easiest way out; nobody, including you, likes stress. Having a variety of payment methods is a major selling point for you. For a long time, I had a phobia for card payments; if it wasn’t ‘pay on delivery’, then I wasn’t buying—I guess you can relate to this. However, you must bear in mind that each option of payment has its own costs. For card payments, which usually come with a subscription and transaction charge, you must ensure that you require a minimum purchase amount not less than your cost.
— Business Insider (@businessinsider) June 19, 2018
Recommended Post: 5 Challenges to Consider Before Starting a Business
Terms of Payment
Having a standard term of payment is very essential for business growth. I once stepped into a barbershop and the first thing that greeted me—right on the wall facing the entrance—was the price list for various age ranges and several circumstances regarding power supply. You should have a standard payment policy for your business that establishes rules for payment of your products or services. Rather than creating a ‘customer by customer’ terms of payment, create universal rules of payment for all customers. It makes bookkeeping, especially reconciliations, seamless.
As I stated earlier, proper bookkeeping will give you an edge and place you at the top of your game. It is very important that you, as a business owner, keep track of your money as it comes in and goes out of your business. Keeping a record of your company cash flow will let you know whether you’re doing well or not. It will also help you project and forecast the financial direction of your business using historical data.
Do #smallbusiness #accounts leave you feeling overwhelmed? Do you find it difficult working out who is due to be paid and when? Then maybe it's time to consider hiring a #bookkeeper. Visit https://t.co/sSmuu6T4uA to find out how we could help you and your #business #SmallBusiness pic.twitter.com/Uc6ixOYbPw
— CS Bookkeeping (@CS_Bookkeeping) June 19, 2018
Now, you must note that despite the fact that it is called bookkeeping, you do not need to have a physical book in hand. I would recommend you use a cloud-based accounting software like Wave that can let you keep financial records and track performance on the go—anywhere, anytime as long as you are online.
Owning and running your own business can be exciting, but it can also be overwhelming, especially when it comes to cash flow management for business growth. Keep the above tips in mind while you stir your business towards financial growth and development.
If you’d like to get featured on our Entrepreneur Spotlight, click here to share your startup story with us.
Get latest Technology news, reviews, business-related content with a deliberate emphasis on the African narrative and insightful analysis in Nigeria – straight to your inbox.