Managing finances can be a challenge for any small business owner. Often, the reason your small business is successful is because of the skills you bring to making your product or providing your service. If you don’t have a lot of experience with managing business finances, it can feel like a chore and you could be slipping into bad financial habits that could one day harm your business.
Here are a few things you should do as a small business owner to stay on top of your finances.
1. Pay yourself.
If you’re running a small business, it can be easy to try and put everything into day-to-day operations. After all, that extra capital can often go a long way in helping your business grow. Alexander Lowry, a professor and director of the master of science in financial analysis program at Gordon College, said small business owners shouldn’t overlook their own role in the company and should compensate themselves accordingly. You want to ensure that your business and personal finances are in good shape.
2. Invest in growth.
In addition to paying yourself, it’s important to set aside money and look into growth opportunities. This can allow your business to thrive and move in a healthy financial direction. Business owners should always keep an eye on the future.
3. Have good billing strategy.
Every business owner has a client that is consistently late on its invoices and payments. Managing small business finances also means managing cash flow to ensure your business is operating at a healthy level on a day-to-day basis. If you’re struggling to collect from certain customers or clients, it may be time to get creative with how you bill them.
4. Spread out tax payments.
If you have trouble saving for your quarterly estimated tax payments, make it a monthly payment instead. That way, you can treat tax payments like any other monthly operating expense.
5. Monitor your books.
This is an obvious practice, but a very important one. Do your best to set aside time each day or month to review and monitor your books, even if you’re working with a bookkeeper. It will allow you to become more familiar with the finances of your business, but also provide you with a window into potential financial crime.
6. Focus on expenditures, but also ROI.
Measuring expenditures and return on investment can give you a clear picture of what investments make sense and which may not be worth continuing. Small business owners should be wary of where they spend their money.
7. Set up good financial habits.
Establishing internal financial protocols, even if it’s as simple as blocking out set time to review and update financial information, can go a long way in protecting the financial health of your business. Keeping up with your finances can help you mitigate fraud or risk.
8. Plan ahead.
There will always be business issues that need to be addressed today, but when it comes to your finances, you need to plan for the future.
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