Managing Your Money In A Fledgling Business: A Guide

Managing Your Money In A Fledgling Business: A Guide

Keeping a small business running takes a lot of mental and physical labour because there is so much to do. A lot of different areas require your attention and input. A lot of entrepreneurs or business owners struggle with money management. Keeping track of your business’s finances can be a challenge which is why we have created the following guide, so keep reading to learn more.

Day-to-Day

Most of your money management strategies should be designed to take care of your day-to-day needs. This will likely mean having a system in place to keep track of your incomings and outgoings. However, some business owners simply don’t have the experience or the financial knowledge to keep comprehensive records. If this is the case, it is worth looking into hiring someone to do it for you or looking into tech-based solutions like the software provided by Payhawk. This is designed to address the accounting needs of your small business; they also have a range of resources to help you, you can learn more about them here.

After you have put a system in place to help you track the daily cash flow within your business, you need to start thinking about your records. These records will become important. They often need to be referred back to when ensuring that the books are balanced or when looking over the taxes. This means receipts for business expenses and invoices for both goods provided and received. It is also worth assigning these documents with a reference number to make it easier to keep track of the records, cross-check payments made and received, and refer to them in your taxes.

The Broad View

In addition to the day-to-day finances, as the manager or owner of the business, you are also responsible for looking at the bigger picture. To start with, this means ensuring that the business is legally compliant. Check whether you have acquired all necessary licenses, and remember to take your taxes seriously. You should also put some thought into where you want the business to go; what are your overarching goals? For some, this could be expansion, market share, or increasing the bottom line. Depending on your goals, you are likely to find that you will need money to reach them.

Cutting costs is a necessary practice when it comes to managing any business, but it is especially important for fledgling businesses that are struggling to make ends meet as is. You can cut costs by sourcing cheaper materials but be warned that it could affect the quality of your products. Try looking for ways to keep your utility bills down by switching providers. You should also think about the tasks that you outsource versus doing in-house. Training your staff to do these roles might take more money initially, but it can save a lot in the long run, so it is definitely something to consider.

Finally, it is always worth scouring the internet to see what resources you can access for help. There are schemes and grants for small businesses that you can apply for. Each of them does have different requirements when it comes to the application process, including the submission of business plans and accounts, eligibility criteria, and end goal. Now, not all of these programs will result in your business receiving a stipend or investment, some of them might simply be a tax break, but they can all help.

Separate the Personal and Professional

As the owner of a new business, the difference between personal and professional finances is often a little murky. It is easy to make business purchases from your personal account and vice versa, but this is not a habit that you want to get into. You need to always do your best to keep your business finances separate from your personal accounts. In doing so, you can get a better idea of how profitable your business practices are and, therefore, how viable your business is.

When it comes to paying yourself, it can be tempting to take a huge cut of the profits as a reward for all of your hard work, but again this is not a good idea. While you should make an effort to pay yourself first, you should try to come up with a percentage and stick to it. Think of your percentage as your salary. The more money you give yourself, the less money you leave yourself for unexpected expenses and bills.

In Conclusion

The financial practices that you put in place and your business knowledge obviously directly affect the success of your business endeavours. If you aren’t competent in money management, you are not giving your business the best possible chance to succeed. Making an effort to learn more about how to manage your business’s finances simply makes sense. If it is not within your capabilities, you should think about restructuring your schedule to find the time or hiring someone to take care of this element of your business.