Financial Management Tips When it comes to running your business, finances are one of the most important aspects to consider. Sometimes, managing finances can be easy and straightforward, but other times it can feel like an overwhelming task that you just don’t have time for! If you find yourself in that position, take some time out of your busy schedule to read through these 7 financial management tips to improve your business today!
1) Do not buy new stuff
An easy way to start saving money is by not buying new stuff. Instead of buying a brand new item, look into purchasing gently used goods. The savings can be substantial if you avoid buying new items that are in high demand. This includes things like office equipment, computer software and supplies, appliances and many other products. Before making any big purchases of new equipment or materials, consider how long they’ll last and how much they will save you in maintenance costs over time. Be sure to consider your replacement cycle as well when determining if it is better for you to buy something used or something new. It could mean hundreds or thousands of dollars saved every year for your business by using previously owned items rather than buying everything brand-new from scratch each time it is needed.
2) Set aside money for the future
Entrepreneurs are often so focused on working on their businesses that they forget about financial management. You don’t want to put off making your financial plans. When you set money aside for savings, you protect yourself in case of emergencies and provide yourself with peace of mind. Set up an emergency fund if you don’t already have one in place—but make sure it’s accessible! Experts suggest putting enough money away so that if you lose your job or suffer a significant loss at work, you could still pay your bills for a month without having to touch your regular income stream.
3) Save money, spend smartly
There’s nothing worse than seeing a money-making idea squandered because of poor financial management tips. If you start saving more now, you’ll have more room to experiment later and better prepare yourself for when your business grows and starts earning larger sums. When you do decide to spend, do so wisely. When you budget your funds, try not to pay for anything that doesn’t add value or fulfill a need for your company in some way. Remember that every penny counts – if only because those pennies are likely coming straight out of your bottom line!
4) Think long term
You need to think long term with your financial goals. The great American investor, Warren Buffett, once said: Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down. The reason behind Buffett’s wisdom was that you can get a greater benefit by paying less up front. When starting a business you are likely not going to be on cash flush and will want to save as much money as possible while still getting what you need. If you don’t have enough in your budget then try finding cheaper alternatives until your budget allows for it. This doesn’t mean looking for cheap products that won’t last but having an eye towards saving money where ever possible.
5) Keep track of what you spend
Getting a grip on your expenses is critical, as every business has different profit margins. Start by looking at your last few bank statements and tracking your spending. When you have a good idea of where you’re spending money each month, it becomes easier to cut out unnecessary expenses that aren’t helping your bottom line. From there, categorize expenses into three groups: needs (bills), wants (extras), and investments (the future). Also look for trends in what type of expenses are eating up more than their fair share of cash.
6) Use technology to make your life easier
QuickBooks is not just for businesses looking to consolidate their financial data. QuickBooks can be a great solution for anyone who wants a better handle on their personal finances. The software makes it easy for you to keep track of your income and expenses, so you always know where your money is going, and helps you see how much tax you’ll need to pay come April 15th. By using it regularly (or hiring an accountant who uses it regularly), over time, QuickBooks can help prevent tax time from being quite as painful as it could be Financial Management Tips for your business.
7) Get out and travel
There’s nothing like meeting people in-person to generate new ideas. An easy way to do so is by travelling, and you can write off travel costs as a business expense (as long as your trip is related directly to your work). You can also build relationships with potential customers and partners through events you organize or conferences you attend. As with reading books, if these activities are part of an overall professional development plan, they can be tax deductible.