Staying on top of your finances can be one of the most challenging parts of running a small business. With limited resources, such as staff, space, or supplies, it’s not always easy to plan ahead and manage cash flow. As tedious as it is, managing your business finances is a crucial part of staying afloat and, ultimately, growing your company. This will also allow you to plan for the future of your business while avoiding some nasty surprises along the way. By staying ahead of your revenue and expenses, you will begin to manage your entire business more efficiently.
While you may not be able to hire a professional bookkeeper just yet, there are many other ways to keep those finances organized. Here are some great financial tips for small business owners.
Check company credit score regularly
We learn early on that keeping track of credit scores is an essential part of being financially savvy. This rings true for businesses, too. A regular business credit check gives you a great overview of your company’s financial standing. Without this data, it would be difficult for you to make sure that all your accounts are where they should be.
When you check company credit score, you’re able to make necessary improvements that will allow your business to acquire more credit from suppliers, get loan approvals and even decrease interest paid on loans. A business credit check is a great first step to improving your financial efforts going forward. If you want to improve your cash flow, start here.
Learn to budget
You don’t have to use a business budget to allocate every single dollar in your business, but you definitely need a budget in order to estimate your revenue and expenses. Your business needs and performance are likely to change over time, so it is important to revisit your budget regularly and readjust where necessary.
A budget also allows you to manage your business’ regular expenses without going into unexpected debt. It is a great way of knowing where your profit is being invested and where you could potentially cut costs. Much like a business credit check, a budget gives you key insights into your business’ position and future.
Keep personal and business finances separate
As a small business owner, it can be tempting to merge your personal finances with your business finances. Sometimes, it happens without you noticing. Other times, it is a matter of convenience. Whichever reason you might have, combining finances will only lead to confusion. For example, using a single credit card for personal and business transactions will make it difficult to track your spending on both ends. It can also make you underestimate your expenses, and you may find yourself dipping into business funds for personal purchases. Instead, it would be better to have a separate business credit card for all your business expenses.
As early as possible, create a separate business account. This will not only save you time and effort when it comes to tracking or organizing your financials, but it will also prevent you from spending money that should have been reserved for the business. Keeping personal and business accounts separate is a key aspect of staying organized and professional.