Small businesses are what keeps our communities strong; they provide goods and services at the local level to keep the economy thriving. Opening your own small business can be rewarding, but it can also be difficult to get off the ground and maintain.
Take a look at a few of these financial tips to help your small business continue running smoothly.
Keep your records up to date
If you run your own business, you’ll wear many hats and have numerous responsibilities. One thing you do not want to overlook is the maintenance of your records. Don’t put off your bookkeeping needs; accounts payable and receivable and cash flow all need to be updated every day. Break your expenses into the most essential chunks, such as categorizing your expenses, sending invoices and paying employees, to keep bookkeeping tasks more manageable.
You may also consider outsourcing some of these important tasks, especially when a single mistake could result in major consequences for your business. Consider taking advantage of payroll processing services or hiring a bookkeeper to work 10 hours a week balancing the books.
Hire an accounting professional
Hiring and meeting with an accounting professional consistently can help keep your finances on track and take some of the work off your plate. Not only can they help you with tax preparation services, they can provide insight and expertise regarding investments and other growth opportunities that can help your business continue along the path of success.
If your business goes in the red, and you find yourself in hot water with the IRS, the advice of a tax professional will be invaluable.
Understand your cash flow
Most industries have a busy season. Accounting firms, for example, see a huge spike in traffic flow during tax season. If you own a pool company or outdoor furniture store, your busy season may be in the spring and early summer.
Estimating your seasonal cash flow can help you prepare and make good financial decisions for the rest of the year. You may find you need to have a cushion during the slower months, and planning ahead can prevent frustration and heartache.
Do you have a budget and an Emergency Fund?
Stick to a budget
Whether you own a three-man company or a 300-man company, sticking to a budget is vital to your success. You may find that as you grow your budgeting needs evolve, and you’ll need to keep adjusting. Keep a keen eye on profit patterns and make sure to revise your monthly and annual budgets on a consistent basis to make sure you stay on track.
Have an Emergency Fund
“Hope for the best, prepare for the worst” is the idea rainy day funds are built upon. Just like having a personal savings, a savings for your business is just good practice and could help get you out of a pinch. When unexpected expenses arise, such as structural problems, late payments, delivery vehicle or equipment repair and the like, having an emergency fund is a much better idea than using a high interest credit card.
Decide how much money you can put aside each money and make it a part of your budget. You’ll thank yourself later.
Don’t do it all by yourself
Leverage technology
With so many new online services and offerings, small businesses no longer have to worry about spending a lot of money upfront to get their business off the ground. There are countless of marketing and management tools at your disposal online, from PayPal for invoicing to Zoom and Skype for communication and Hootsuite for social media marketing.
Temper growth
While you may feel tempted to expand your team when you finally feel like you’ve got a bit of financial headroom, be cautious. Expand too quickly, and you may find yourself in a tight spot. Indirect employee costs, such as supplies, materials and benefits can quickly exceed their salary. Before hiring right away, consider outsourcing and offloading internal work to contractors and freelancers.
Don’t procrastinate
If you find yourself in financial trouble, deal with it as quickly as possible. Talk to your banker or lender as soon as you discover trouble. They can often offer options or advice to help you tackle problems as long as you keep communication channels open.
Follow these finance tips and you’ll put your business off on the right start.
