10 Tips for Managing Small Business Finances
Proper management of business finances can be a challenging task for small enterprises. You don’t want to spend money you won’t have, but that can be not easy when you aren’t sure where the money is going. Here are ten simple tips for keeping your store afloat and in the black.
1. Plan your spending by planning for cash flow.
Most entrepreneurs don’t think about where their money is going when buying supplies. You have to think ahead and keep things under control. Things might be more expensive initially, but you won’t be paying them as much when you need them later on.
2. Get organized.
Please keep track of all your receipts, and categorize them according to their purpose. You should also have a system for classifying your inventory. You might be tempted to throw everything into a packing box, but make sure you don’t spend money on boxes that aren’t worth it. Go through each item, and only purchase what you need to make money for the day or week.
3. Make sure you are competitive in your pricing structure.
This is an essential part of financial planning. Know what your competitors are charging and how you can be different. You don’t want to give away a good product for far too cheap. The profit margin will kill you. The same goes for advertising; you need to be willing to spend money to get the word out that you are an excellent business.
4. See what your competitor charges for the same service or product, and adjust accordingly.
It would be best if you were prepared to bring in more money, keeping prices competitive. If you can charge more than your competitors, you will make more profit in less time.
5. Keep track of sales and profits during the year.
The best way to keep the books is to keep them up-to-date regularly throughout the year, not just as they are needed at tax time. Make sure you chart your progress. You can also use spreadsheets to keep your system organized. These could save you a lot of time when you need to make certain adjustments and provide some help in getting your balance sheet up-to-date.
6. Track down old insurance or receivables claims.
Sometimes things get so out of hand that you will want to pay for some old business debts with the money saved from running the business. This is a bad idea. Investigate to see who owes you money, and talk with them about when they will pay up. Search for old insurance claims you have never taken action on and get them paid off.
7. Consider using a single bank account for your business.
You might be tempted to use your bank account and create a business account. This isn’t such a good idea. You might be tempted to spend money out of the business account, and you will never have an accurate idea of how much money you have made or lost. Creating a completely different checking account for the business will help keep things in control.
8. Keep track of your business expenses and earnings.
This will allow you to function better as a business owner because you will be aware of what is going on with your products and services and your costs. This information is crucial to making any decision when it comes to running a small business.
9. Get insurance for your business at a reasonable price.
Insurance can be negotiated, especially if you don’t have a history with the company yet. If you are starting up, it is vital to get at least some insurance to have coverage for small losses. You will be able to buy more in the future once you have a history with your insurance company. In the meantime, make sure you purchase a policy in case of theft or fire.
10. Reinvest in your business when you have money left over.
Don’t spend it all on parties and trips to Disneyland. You need to put some of that back into the store so it can continue to grow. People will be more likely to pay attention if you have a special event happening.
You don’t want to open your store and find out later that you have run out of money or something is about to break down. These business tips will help you keep running smoothly and allow your small businesses to stay in the black.
