Financial management is a big deal for small businesses and startups. This is because small businesses might be unable to hire professional hands to keep their account books in order. This, however, is not an excuse for keeping a slurpy, imbalanced account.
Instead of hiring regular full-time staff members and accumulating more expenses for your small business, you can outsource some tasks and save a whole lot of money. There is virtually no aspect of the business that cannot be outsourced; from human resources management, marketing, and financial management.
One of the biggest mistakes startup business owners make is treating their businesses as an extension of their personal life. Separate your business as a corporate entity by opening a corporate bank account for the business. This is important as you cannot secure loans or grants from certain bodies if this is not in place.
The need for the diligent keeping of records by entrepreneurs cannot be overemphasized because keeping the record of transactions, invoices, and receipts, equips business owners and potential investors with the needed information required to make prudent business decisions.
This is a basic financial rule. Limit your expenses to your income. Your business will always be in deficit and in the long run, require external financial aid to augment capital projects should you spend above your income.
Separating business finances from personal funds is essential in managing business finances. Being self-disciplined is a “major key” to managing your business finances.
Similar to separating business from pleasure is paying yourself. Where an entrepreneur allocates a certain amount monthly as a salary, they are less likely to use business funds to take care of personal needs. This is a healthy way to test the profitability of a business, as the true position of a business can be assessed.
Small business associations would enable you to grow your network. Not only will you benefit from product discount offers these small business associations have with suppliers and vendors but also benefit from thrifts which could provide a source of capital for a business and also have exclusive access to certain government funding initiatives.
One of the most salient truths about managing finances that most business owners do not know about is that remitting taxes could actually help save money. Non-remittance of taxes & levies could amount in huge penalties and fines for small business in the future. In hindsight, the business owner would realize that prompt remittance of taxes saves time and money because “Prevention is better than cure”.
The less a business owner handles cash, the less the risk of theft or unplanned spending. You can adopt various payment channels like debit cards, mobile payment, POS terminals, and even online bank transfer.
Business owners need to embrace technology to keep their books. Software such as Wave, Accounteer, Invoice.ng, and Payant are software small businesses can use, to create invoices, track bank balances and any other transactions. Products like eChange can be also used to give customers their balance (i.e. change)
All these tips and advice will not work if you are not disciplined to follow through with your decisions.
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