Effective ways to stay on top of your Small Business Finances

When you run a small business, you may find that things quickly become overwhelming. You may find it difficult to keep track of all the things that you have to do, and this can make the business model you have inefficient. It doesn’t need to be this way at all, and staying in financial control is easy when you make the right changes.

Always Have a Plan

If you have no idea where you want to go, then how can you expect to get there? Or even know when you have arrived? Writing a business plan isn’t just for those who are applying for a loan. It can help you to establish where you are right now, and it could also help you to know where you want to be in five years’ time. If you are having short-term cash problems, then your business plan can stop you from making knee-jerk reactions. It can also help you to understand how your income is going to develop, and how things are progressing. When you are writing your business plan, make sure that you include your financial targets, your budget, your profit and even your forecast for the next year. This will put you in a much stronger position to understand your finances properly.

Understand your Position

It’s so important that you monitor your bank account on a regular basis. Online banking is a fantastic way for you to do this, and a lot of banks even give you the chance to get an app on your phone as well. This will always let you know how much cash you have in your bank, how much you expect the bills you have to hit you and how you are going to handle yourself in the days ahead.

Deadlines

If you miss a deadline to pay your tax, then this could cost you dearly. You may even find that you have to face a ton of nasty interest at a later date as well. If you want to avoid this then the best way for you to do that would be for you to hire a reliable accountant. They will help you to get on track and they can also help you to avoid any tax liability. If you want to make things easier for yourself when it comes to tax then it is a good idea for you to look into “making tax digital”.

Chase down Money that’s Owed

You are not in the business of giving products or services away for free. Don’t let any unpaid debts affect you. Sure, it may be uncomfortable, and it may be awkward to try and ask someone for money they owe. If you don’t however then they may eventually cause you to lose out on potential profit. If you want to put an end to this then you need to write a strong, well-written email stating that you are going to have strict payment terms and that if these are not met then you may consider legal action. Not only will your clients ensure that they make the payments, but they will also respect you for being a sensible business owner.

Banking Services

Banks will charge you a ton if you happen to spend too much with your business account. You

might get charged for making cheque payments and you may also get charged for making withdrawals as well. Don’t be afraid to challenge these from time to time, or even shop around for alternatives. You may find that they are overcharging you when compared to other services and if you can confront them about this then they may offer you a better rate. If they can’t then don’t be afraid to take your business elsewhere.

Trim Expenses

Operating your business efficiently is crucial if you want to get the best result out of it. Have a look through all of your bills to make sure that you are not paying anything unnecessarily. After all, it is very easy to set up a payment to something, but forgetting about it is just as easy as well. If you think that your bills are too high, then there are things that you can do to try and reduce them. Consider trying to install energy efficient light bulbs, or even consider changing your gas company. Little changes like this can go a long way and they can also help you to take back control of your finances too.

Cash is King

Turning a profit is what running a business is all about. Even the most successful of businesses will become stuck if they run out of cash to cover their every day running costs. For this reason, you need to work out how much your business needs to survive every single month and you also need to calculate your rent and utilities. Calculating the things you have to pay, such as rent, your employee salaries and fees is also crucial. When you have this number, you then need to make sure that you are bringing in this amount of money every single month. A lot of people think that they are doing this already, which is great, but if you are not careful then you may find that you are wasting a lot of money at the same time. You might be buying in too much stock or even office supplies. If you are doing this then you will have assets that are adding value to your business, but it’s not cash, and it won’t be helping you to pay the bills.

Don’t Stick Your Head in the Sand

If you experience a business meltdown or if the economy takes a turn for the worst, then the worst thing that you can do is stick your head in the sand. It’s so important that you take action as soon as you can as this will help you to limit the damage to your business. You also need to consider your clients, your employees and even your suppliers. It’s not fair on them to ignore the issues that your business is having, so do keep that in mind.

Be Frugal

Set your own salary as low as you possibly can so that you can keep your business flexible. You might also want to take advantage of any government benefits that are available as well. When you do this, you can really save yourself a small fortune in the future and you can also make yourself way more financially stable. It will also help you to stay efficient for the future months as well, and this is great if you happen to experience any unexpected costs.

Travel Costs

This is something that a lot of businesses overlook. If you are constantly travelling, then you need to make sure that you keep the costs to a minimum. Remember that all you need is somewhere to sleep at night. Don’t overspend on trying to book something more luxurious than what you need. This sets a bad precedent to your team and it also gives you a cost that is completely unnecessary. Sure, staying in a nice hotel is great and you may think that you deserve it after all the hard work you put in. This is most certainly the case, but there will be a time when you can do this comfortably and that all starts with cutting costs now.

Legal Fees

Legal fees can easily get out of hand if you are not careful. If you want to try and avoid this or if you need to try and lower the amount of legal fees that you have then consider hiring someone who has a lower hourly rate. When you do this, you can then save money while still getting the help you need. If you are not careful however then you may end up compromising your own legal services and this is something that you need to avoid. You could end up paying way more legal costs in the future if you do this, and it could have a major impact on your business too.

Take Care when Expanding

It’s understandable that you will want to expand your business from time to time. If you expand too early then you may not be able to fund your company and you may not be able to sustain a bigger business model either. If you want to stop this from happening, then you need to take your time. You also need to work out how much your fees are going to come to, and how much extra energy you are going to have to pay for as well. If you are moving to a bigger building then there is a high chance that you will have to pay more insurance as well, and this is another expense that you need to take into account.

 

So by really taking your time and by putting the work in, you can be sure to help yourself and those around you to have a more stable working environment.

 

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