Increasing operational costs and unexpected expenses are some of the leading financial worries for small business owners, according to a 2015 study from small business lenders Headway Capital. But financial matters needn’t keep you up at night if you follow these simple tips. They might even increase your success by just changing a few of your habits.
1. Automate Your Bill Payments
Remembering when payments are due and manually paying them takes time and energy away from your primary business activities. It makes more sense to take a hands-off approach and automate your bill payments. You can set up automatic payments for companies including utility providers and credit card firms through their websites or over the phone. If this facility isn’t available, use your online banking portal to automate other regular payments. Just make sure your nominated account always has enough funds to pay your bills to avoid default payment penalties.
2. Take Accounting And Invoicing Online
Online accounting and invoicing tools can streamline your processes and make your records more accurate, so they’re ideal for small business owners without math or finance backgrounds. These online tools aim to be user-friendly and intuitive for most people with basic computer literacy. Many also have companion apps so you can monitor your finances in real time anywhere you have Wi-Fi access. Look for programs offering free trials like online invoicing with Sage One, which allows you to see whether it works for you without making a financial investment.
3. Create Realistic Budgets
Small business owners are often told creating a budget and sticking to it is one of the best ways to stay in the black. However, they don’t realize that just creating a budget won’t do the trick. That budget needs to be realistic, or you’ll never stick to it.
To create a realistic budget, you must know how much money you’re making and spending. Manually tally your receipts or use transaction tracking software to track your sales. When you know your income and what you’re spending in various categories, you can identify realistic areas for cutting costs.
4. Understand Your Sales Cycle
If you’re lucky, you’ll enjoy strong year-round sales. However, most small businesses have boom periods followed by lean months. If you’re in the tourism industry, for example, you might be busiest in summer and generate fewer winter sales. Monitor your sales month to month and year to year to understand your typical sales cycle. When you know this, you’ll know when you should put money aside to help sustain your business during less productive months.
5. Select The Right Investors
Investors can allow you to access more funds than a small business loan would. These funds also aren’t repayable on a set schedule. Investors can help your business stay afloat during your tough times and help it grow, but they should require more than a checkbook to win you over.
Consider how involved you want your investors to be. Are you simply looking for a handout, do you want business guidance, or do you want to benefit from your association with them? “You’ll want to ask questions about their most recent investments, what they typically provide to companies, their expectation of CEOs and how involved they like to be,” attorney Bo Yaghmaie suggested in Entrepreneur. Consider their answers carefully to decide whether a potential investor is right for your business.
6. Don’t Procrastinate
If you’re not financially minded, it can be easy to direct your efforts into the areas of your business you’re passionate about and procrastinate about dealing with your money matters. However, neglecting your finances won’t make this work go away. In fact, it’ll only make the task larger and more confusing when you get to it.
Set aside regular time to deal with financial matters and stick to this schedule. Break the job into smaller tasks like paying employees and calling late payers if you’re feeling overwhelmed. Invest in software that can make the job easier. If you can’t bear to deal with your business finances, hire a person who can. Whatever you do, just don’t fail to act, because this approach is a recipe for disaster.
Money matters can cause sleepless nights for many small business owners, but if you follow these simple tips, you can feel confident you’re making the right financial decisions for your company.
Financial Tips For Small Business Owners
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