17 Aug 10 Quick Tips for Small Business Money Management
It goes without saying that small business money management is critical. But in practice, many small business owners are experts at what they do, not at balancing the books.
Maybe you’re a great chef and just opened a restaurant. Perhaps you worked in construction for years and found an opportunity to get started as an independent contractor. If this sounds like you, consider these 10 quick small business money management tips.
1. Create a Budget and Keep Updating It
When you start a business, create a budget to help you project costs and keep them balanced with revenues. But don’t let that initial framework guide your company for too long. Each year, look at what you spent and earned and tweak your budget accordingly.
2. Set Aside Savings
Money is a tool for your business. If you’re too focused on immediate needs and neglect savings, you may not have the capital to take on new projects or cover emergency expenses. Find balance by building saving into your budget – possibly even itemizing your savings relative to specific goals.
3. Familiarize Yourself with Accounting Software
Accounting software can do a lot of the menial work for you, simplifying small business money management tasks. QuickBooks is one popular accounting system option. But it’s important to choose the right accounting software for your specific needs. Take time to research different options so you can make an informed decision.
4. Develop a Cash Flow Strategy
This small business money management step builds on your budget. Once you have a core idea of your costs and revenue streams, look at seasonal and sales-related trends in your income. Then build strategies to help ensure you maintain cash flow as steadily as possible. This will help create a cash reserve capable of withstanding unexpected problems.
5. Evaluate Funding Options
Small businesses have several options for funding and small business loans. Take the time to learn the differences between each option, such as alternative lenders and traditional banks. You may be surprised by what’s available. For example, lenders focused on the small business market will offer working capital loans that help you manage daily expenses, such as payroll and operating costs.
6. Be Realistic
Successful small business money management requires realistic goal setting. Being too conservative or free in how you spend money can be problematic. You need to set realistic spending goals to ensure you’re prepared for fluctuations in your cash flow.
7. Don’t Neglect Documentation
Save business-related receipts. Take the time to track invoices. Document your costs and income carefully in your budget sheet. A paper trail – whether physical or digital – is critical in helping you manage money effectively. It can also simplify taxes, payroll, and similar processes.
8. Separate Business from Personal
You’ll likely end up investing personal funds into your business, but it’s important to keep your personal and business accounts separate. The best way to maintain a clear separation of your expenses is to set a personal budget and a business budget. This can protect your credit rating and ensure your business is safeguarded from isolated personal financial problems, and vice versa.
9. Take an Accounting Class
While these small business money management tips offer a great start, you should really know the basics of business accounting. Local community colleges and adult education centers are good places to look for fiscal management classes. They’ll provide a better understanding of how cash moves in and out of your business.
10. Establish Goals
Once you understand your business finances, set clear goals to work toward. Then consider how additional funding resources can help you achieve them.
Small business money management can be complicated, but we’re here to help!
At QuickBridge, we take the time to get to know our customers so our loan offerings will match their growth efforts. Contact us today to learn more about how we can help you expand or sustain cash flow.