Like most small business owners out there, you too probably wear many hats, including the one of CFO for your startup. If that’s the case, you’ve come to the right place to learn how to nail this position!
Like it or not, we need to have that boring talk: financial management. While it may not be the most exciting topic about your business, finances still need to be on top of your priorities if you want to manage your business right.
Properly managing your business’ money is really the only way to secure it from failure, even on those rainy days when customers seem to have forgotten about you. It’s also how you make sure that you have enough resources for your business to keep going. Plus, smart money management is also the strategy to find resources to invest further in your business and grow it. Simply put, ensuring that your business is financially healthy is the way to keep it thriving.
This article explores the top useful financial tips every business owner should follow to stabilise their company and make it less likely to fail.
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Pay attention to your budget
One of the most important things you can do to protect your business financially is to create a budget and stick to it. Creating a budget is essential to preventing your business from sinking into debt.
A detailed budget can help you in so many directions, including:
- Keeping track of your expenses and profits
- Differentiating the “wants” from the “must-haves” in every area of your business
- Identifying resources for saving
- Identifying financial resources for investing
Ok, cool, but how do you create a budget for your small business? There are a few things you need to consider for a clear and accurate budget. Start by analysing your costs and look for ways to minimise them. Next, estimate your revenue and know your gross profit margin. You should also project your business’s cash flow and set your spending goals. Now, bring all that together, and you’re done. You have a budget.
If you want a more organised budget, you can use an accounting software tool to unlock the power of accurate and timely reporting that empowers you with relevant financial information.
Tap into the potential of technology
Speaking of accounting software solutions, there’s so much more technology out there to explore and level up your CFO game.
Technology is an integral part of all businesses these days, and your business is likely no exception. You use various digital tools to improve your customer service, promote your products and business, and manage your human resources correctly. So, why not also use it for proper financial management?
From expense tracking tools to billing and payment processing solutions, accounting software tools, tax preparation, and inventory tracking apps, there are a number of digital tools you can use to better manage your business money.
Automate bill payments
You likely already have so much on your plate as a business owner. As a small business owner, you probably complete so many tasks that you can barely have a moment to breathe throughout the day. So, naturally, it’s nearly impossible for any busy business owner to remember when all essential payments are due. This can result in pretty heavy penalties to pay. Besides that, manually paying bills is hugely time consuming and can draw your energy and focus away from your primary business tasks.
The good news is that we’re living in a highly digitised era in which automating bill payments is so easy and efficient. No need to manually fill out forms to make payments. You can simply use online banking solutions to automate all these payments and make sure that you have enough funds in your accounts to pay for the bills.
Automating your payments will save you time and effort and spare you from having to pay penalties for late payments.
Manage debt
Debt is never fun to talk about. Yet, we must do so. Unresolved debt can quickly turn into even more debt during difficult times. So, you may want to get this resolved as quickly as possible.
Like most small business owners, you probably had to borrow some money to transform your idea into a business. Naturally, now you have to pay that money back, and you should do so as quickly and efficiently as possible.
One way to maintain your business is financially healthy is to make paying off a priority. Once you’re done paying off your loan, you can redirect your extra profit to growth and innovation. But, first, make sure to get this tremendous burden off of your business’s shoulders.
Look for ways to increase revenue
More money naturally means more financial stability for your business. The more you sell also means that your business is better financially prepared to deal with less lucrative times or unexpected payments.
So, part of properly managing your business’s finances involves increasing revenue. This can mean creating a more robust marketing strategy to attract more buyers, launching new products/services, or generally improving some areas of your business to fulfil customers’ needs better and resolve their pain points.
Market research can help you at this point. It can empower you to understand better your target audience, where your business stands in their perspective, and identify new growth opportunities.
Save for rainy days
Last but not least, any business should be prepared for those less lucrative days that can occur when you expect them the least. Financial crises can happen all the time in business, whether due to a reputation problem, less profitable months, or something as unexpected as a pandemic. For this reason, your business needs to be prepared to support itself and get through those rainy days successfully.
Make sure to have a savings account and direct a small portion of your profit to ensure that you have a financial safety net should anything wrong cut your revenue for a couple of months.
