It is not uncommon that a budding entrepreneur, businessman, or a young gun, “who wants to make it big” lacks financial knowledge, expertise in financial management. This explains why many small businesses often struggle crossing the three-year mark.
One of the reasons why young entrepreneurs jump in the “game” despite a lack of financial knowledge is because the “product/service” is enough to appeal to the audience.
This is correct but if it is backed up with great financial knowledge – success is sure to follow!
So, we have rounded up 7 tips that will help you manage your business finances efficiently.
1. Educating yourself
When I say you need to educate yourself, do I mean you need to attend business school to get the required financial knowledge? Absolutely not. Read the story of any startup that now has an Initial Public Offering, and you are there.
Keep yourself updated with the resources available on the internet. You can also order some international financial bestsellers for some real-time insight. Start with knowing in detail about Financial Accounts and gradually move to management accounts. Slowly, you will find yourself at the end of the tunnel with significant knowledge about finance!
2. Separate business and personal accounts
If you ever studied business studies back in high school, one of the first lessons that we were taught was that you and your business are separate entities.
So how can you have the same bank account for a different business entity? To properly manage your finances, you need to separate the accounts as soon as possible.
3. Pay yourself
I absolutely understand that your company is your heart and soul, and you are ready to do anything to create another Amazon or Facebook. When you are driven by passion, not paying yourself in the initial days makes a lot of sense. Doesn’t it? Wrong.
Honestly, you will not be able to last long if you commit to investing everything in your company. And if you do not last, how long will your startup last, without you. So, remember, not paying yourself may sound good, but is detrimental.
4. Staying on top of cloud-based accounting
Technology is one of the most useful things for any business. One such piece of technology that you need to learn, read, and invest in its cloud-based software.
They will not only make your business efficient, streamlined, and more accessible but also eliminate a lot of manual work. How? As I said, you need to do a detailed management study for the same, but don’t worry, it’s all up there, you just need to reach the right place!
5. Top priority, your taxes
One of the most important yet one of the most difficult things. New business owners find tax planning quite challenging. You need to be cautious and wise while planning on your taxes.
And a good tax plan is the one that helps you claim more deductions, provides greater savings, and ends up saving a significant sum of money, over time. Remember, you can avoid, but not evade, so be wise.
6. Dedicating time to monitoring and measuring performance
One way to monitor and measure performance is through your books, which means financial accounts. This includes return on investments, expenditures, assets, and liabilities. These are data-driven operations that you must always keep an eye on.
But the other way to monitor and measure things is, to drop to the ground level, communicate to your staff and know what is actually going around. This will help you to know what can actually be done better.
7. Borrowing better
To run a business, you will need funds, and more often than not, you will need to borrow them from lenders. What, how, and where you borrow will decide a lot about your financial condition.
Not every bank will have a profitable offer for you. Nor will every bank offering you have reasonable interest rates alongside. Educate yourself, be aware of every lender around you, like the Great Southern Bank (formerly CUA). They are the largest credit union in Australia.
Rounding up, remember that Rome wasn’t built in a day. Nor did Facebook, Amazon, Tesla, or any other company you look up to. Things take time, and sometimes, patience is your best friend.