Managing business finances can be a bit tricky, or for lack of better terms—absolutely confusing! The main objective is to have more money coming in than you have going out, but of course there’s so much more to it than that.
We’re presenting six tips for managing your small business finances as a business owner through your journey of entrepreneurship. Check them out below:
Managing Your Small Business Finances
Tip #1—Know your numbers
Excel is going to be your new BFF, so learn to love it! The first step to mastering small business finances is to know your numbers inside and out. Start by collecting all of your expenses – insurance, inventory, supplies, etc., and all of your expected payments from customers, clients and partners.
Tip #2—Be prepared for the unexpected
Now start thinking through everything that could crop up: good, like a company doubling their monthly order, or bad, like an unexpected tax bill or the loss of your star employee. You don’t need a contingency plan for every single one, but you should have it on your radar so you’re prepared to hit the ground running when surprises hit inevitably.
Tip #3—Control your cash flow
Take that spreadsheet from Tip #1 and start projecting what your cash flow might look like over time. Take into account things like seasonal fluctuations based on holidays or vacations so that you know when you need to stockpile money, and when you have a buffer to invest in the growth of your business.
Tip #4—Don’t put limitations on your dreams
This is a BIG one! You might feel good about your finances today, but you should identify a goal that will bring your business to the next level, and true back to that goal when making future decisions. Capital One recommends opening a business savings account to help you stow away funds for the next big milestone.
Tip #5—Keep your business finances separate
Speaking of bank accounts, even if you are a sole proprietor, you should separate your business and personal finances whenever possible to make things a little easier come tax time!
Tip #6—Find a partner you trust
Whether it’s a business banker, an accountant or another advisor, find someone you can trust who can help you set your business up for financial success. Knowing your numbers is crucial, but you don’t have to go it alone!
Running a business is hard, but don’t let fear prevent you from mastering your finances. These six tips on how to manage your business finances should help no matter what stage your business is at.