Money management is a serious topic for small businesses. Cash flow, inventory and forecasting are all important parts of creating a successful and profitable business. However, many small business owners are so caught up running their businesses, that finances can take a back seat. Here are five money management tips for every small business owner.
1 Prioritise your finances
To get your business finances in order, you need to prioritise your money management. Many businesses fail because of cash flow issues, so it’s important to regularly take time out to review your finances. If finances aren’t your strong point, get someone onboard who can help you manage your money. While it may initially be a cost to the business, it may end up saving you serious dollars in the long run. Invest in easy-to-use financial software, like QuickBooks, so you can easily view your incoming and outgoing expenses at any time.
2 Get on top of your tax
There’s nothing worse than a nasty surprise, like a big tax bill, at the end of the financial year. It pays to get on top of your tax early, so you can better manage your expenses. Talk to your advisor about tax deductions prior to the end of the financial year, so your business can better manage it’s upcoming expenses. There are many obligations for small businesses, especially when you start to bring on staff, including payroll and super contributions – get up to speed quickly to avoid any unnecessary bills or fines.
3 Review your expenses regularly
It costs money to run a business. But how many of your expenses are completely necessary? And how many of your suppliers are offering you the best deal? Put time in your calendar to review your regular expenses every 6 to 12 months. Talk to your suppliers and see if you can negotiate a better deal or a discount for being a loyal customer. Always make sure you pay all of your bills on time to avoid any late fees or unnecessary interest payments.
4 Separate personal from business
There’s nothing worse than getting all your personal expenses caught up in your business accounts. As soon as you can, try and separate personal from business, so you can accurately forecast and budget for your business. If you need to spend your business income on personal expenses regularly, you may decide it’s best to start paying yourself a salary. The easiest way to separate personal from business, is to set up separate bank accounts from day one.
5 Prepare and plan for the future
It’s easy to get caught up in the here and now, but as a small business owner, you need to constantly look to the future. What will your finances look like next year, or in five years time? How can you start preparing for growth today? Work alongside your accountant to better understand how your business can prepare and plan for the future. As your business grows, your expenses will likely increase as well, so it’s worthwhile preparing for the transition now.