Mastering the art of managing the finances of your small business is not easy, and that’s why we have prepared several tips that might be helpful.
1. Devise and revise your financial goals and targets
Make sure you and your team are always working towards a goal. Be clear about your short-term and long-term business visions, and ensure that these visions are updated every now and then. Re-examining where you’d like to go helps you in identifying key priorities and obstacles that you will have to tackle.
2. Review your costs regularly
It is important for you, as a business owner, to know where your money went. By regularly revising your spending habits, you can discover the areas in which your money could have been spent more efficiently, as well as identify which areas need extra cash injection.
3. Do not procrastinate your bookkeeping activities!
Do not put off your bookkeeping needs - pay whatever debts you owe on time and send invoices right after a transaction took place. This way, you will always have your cash flow on top of things – which will definitely make your bookkeeping way simpler in the future.
4. Boost your savings
With a lot of uncertainties in the market, you will find having a backup savings plan to be a great peace of mind. Every time you revise your budget you might want to take into account whether you have enough in your savings to deal with potential losses or to protect you should anything go south.
5. Forecast your financial position
Projecting your future position will help you plan better. Identifying anticipated boom and bust periods will allow you to plan accordingly and adjust your strategy to minimise risk and deal with the volatile environment.
6. Plan for major expenses
Do not surprise your cash flow with large, unexpected expenses. Planning ahead for big expenses will minimise financial blows and ensure your cash flow remains steady to face the day to day operations of your business. More importantly, planning lets you think through alternative methods of financing these big expenses so that you cash flow will not be disrupted.
7. Understand your cash flow cycles
By understanding your cash flow cycle, or cash conversion cycle, you can measure the effectiveness of your management as well as the overall health of your business. This information will definitely be useful for your operations carrying forward.
8. Hire someone to manage your accounting
We understand that as small business owners, you will have a lot to take care of from operational matters, to marketing and to finances. Having someone responsible for solely bookkeeping matters will take one thing off your plate and will ensure accurate track of your income and costs.
9. Leverage technology
There is a lot of automated accounting software in the market that can help you track your income and expenses such as Freshbooks, Quickbooks, MYOB, and much more. This will help in keeping your bookkeeping matters organised, hence will improve efficiency within your business.
