Having a successful business is about more than having a great product and offering exceptional service. You need to have a strategy in place for managing your small business finances, to ensure that there’s money available to help you scale and grow.
Securing your business finances is a series of small steps and actions that you take every day, yielding tremendous results over time. Here are some helpful tips for managing your small business’s finances.
Put Systems in Place
Everything you do within your business should be intentional. Creating systems and standard operating procedures (SOPs) for the various tasks in your business will help you manage your finances effectively. Outline the different processes within your business and create SOPs to ensure consistency across the board. This will save time and money over time.
In addition to the right processes, it’s essential to have the right tools in place. Look at everything from invoicing to payment methods. If business credit is an issue, here’s a great software to get your finances back on track.
Track Everything
Track every expense made through your business, from buying pens to grabbing coffee for a client. It’s often the little expenses that add up over time and do the most damage. By tracking your pennies, you’ll be able to see where you can make cuts to improve your overall cash flow.
Don’t just evaluate the money that’s leaving your business; look at the ROI implications as well. Sure, investing in social media scheduling software might cost your business hundreds of dollars each year, but having an employee handle various channels by hand could cost thousands in productivity.
Pay Yourself
One of the challenges small business owners face is putting everything they have into the business. It’s essential to set up a plan to pay yourself, no matter how much money you’re making.
Take some time to learn about Profit First distributions, so that you can divide your revenue accordingly. Set up various accounts so that money can be allocated where it needs to go to ensure the bills are paid, both within the business and your personal life.
Plan for Tax Season Year Round
Tax season should hold a place in your mind all year round. Keep on top of recording expenses and income using the tools and protocols mentioned in earlier steps. Set aside time each month to ensure everything is up to date and organized so that you’re ready.
By prioritizing organization, you can strive to get the best possible return on your taxes and reduce the risk of late fees and audits. This level of organization also helps give you a snapshot of how your business is doing month by month.
Reinvest in Your Business
Don’t hesitate to reinvest in your business through marketing and expansion. Generally speaking, a successful small business will allocate 10% of it’s revenue to growth efforts. As your business grows, it will do so exponentially.
The benefit of using a percentage based finance management system for business growth is that it will scale based on the highs and lows of your organization. This is especially important for seasonal businesses, such as restaurants that get higher sales in the summer or product-based companies that do well during the holidays.
Nail Your Invoicing Strategy
A lot of businesses lose money based on poor invoicing practices. When you put systems in place, pay special attention to how quickly you invoice customers and your protocol for following up.
Set aside time each week to ensure invoicing is always up to date; the quicker you bill someone, the faster they’ll pay. Consider adding incentives for early payment, such as a discount period.
Structure and organization is the key to managing your small business finances. Evaluate your current procedures to see what’s working and what isn’t, track your expenses, and expedite your invoicing for continued success.
