Managing a small business can be exciting but also comes with a lot of responsibility. As a small business owner, you may be faced with a lot of financial decisions, which can require much thought and planning. Here are some tips on how to effectively manage your finances.
1. Create a Budget
A budget will help you stay on track with your finances on your business journey. You might want to consider having a marketing budget and an office-expense budget to help. A budget can also count as the decision maker when planning new financial opportunities for your business.
If you see you are about to go over budget, don’t fret! Sit down and see where you can cut costs. You might want hold off on that $3,000 marketing strategy until the following year so you have enough funds to hold you over. Consider reworking your budget every month and seeing where you can save so you are never in the red.
2. Get Organized
Do you have a place where you keep invoices and other financial documents? If you want your business to be successful, it is important that you know where all documents are placed at all times. Any lost records or important financial documents may cause costly issues later on. Consider keeping everything, including information on business credit cards, in a computerized program that can be backed up and keep your documents safe.
3. Separate Personal & Business Expenses
You may get very confused and create a big mess if you don’t separate your business and personal expenses. It also can get very confusing deciding which transactions were for your business and which weren’t. This will eventually lead you to fix up the mess later on — which can get costly. Avoid this problem altogether by separating both expenses. If you think you are too deep in this already, consider speaking with a financial adviser or planner to help you get situated. (Not sure where your finances stand? You can view two of your credit scores for free, with updates every two weeks, on Credit.com.)
4. Prioritize Staffing
You may be wondering why staff is important to managing your finances. But this is actually one of the most important parts of your business that is often overlooked. There may come a point in your business when you should expand and add new members of staff, and there may be a time where you need to make cuts. You might have to reevaluate your budget and expenses to make this happen. You also want to make sure you don’t expand your staff too fast and go completely over budget. If you need to fill a position and don’t think you will have the proper funds for a yearly salary, you can consider hiring freelancers or outsourcing companies.