You likely put in a lot of time, effort, and money into getting your small business off the ground, including financial research. Know that once you open your business, your financial research does not end. Here are several tips for managing the financial aspects of being a small business owner.
Keep Up With Invoicing
It’s all too easy to put off invoicing clients and customers, but you do so to your dismay. Create a system so you automatically send invoices after you render services or products. To better ensure that payments don’t come up lost or pushed aside, ensure customers understand they have seven or however many days to pay an invoice. Once you send and invoice, follow up a couple days later to ensure the recipient received the document and agrees with everything on it.
Look Over Your Costs
Rather than put paying for business expenses on automatic, take out time once or twice a year to look over your expenses. You always want a current and factual idea of where your money goes. That way, you can easily and quickly make changes if you feel you’re spending too much money here or not enough there.
Consider a Regular Audits
Audits aren’t reserved specifically for the IRS. On the contrary, auditing is a great way to identify problem areas in your business and take care of them before they spiral out of control. Regular audits also make it easier for you to evaluate your company’s performance, initiatives, plans, and goals.
One essential fact to know about audits is there are different kinds: financial, management, and operational. Financial audits focus on your company’s financial health and ensure you follow the most recent regulations. Management audits study your procedures and company personnel, making sure you have all the necessary business tools to stand the best chance of success. With operational audits, the professional conducting the audit pinpoints marketing, production, sales, and similar commercial procedures.
Create Financial Projections
Do you know whether you can anticipate a future of financial success, stagnation, or decline? With financial projections, you get a sense of how your business is likely to perform in the future. For this small business management tip, look to your original business plan to help get an idea of potential obstacles you may run into over time.
Be Careful About Travel Costs
No matter if it’s you traveling or your employees, look at travel costs like they come out of your pocket rather than company funds. Remember, the point of business trips is to conduct business, not enjoy lavish accommodations. This does not mean you cannot stay in a nice hotel, just that you should base your decision on overall comfort, cleanliness, and location. Also, ask yourself how much of a return your travel costs provide you and your company.
Rent When You Can
Did you buy all your business equipment? By renting equipment, you have an easier time keeping up with the latest tech, and you don’t have to absorb maintenance costs. Before buying equipment, ask yourself if it is for year-round use or only seasonal use. By renting seasonal equipment, there’s less chance of you paying more than you should.
Let the Money Come In Before You Spend It
Maybe there’s business equipment or supplies you genuinely need to operate your business. Wait until you have the necessary revenue before buying anything, as premature purchases can lead to blocked working capital.
You do not have to earn a financial degree to better manage your company’s finances. Use the above tips to see how they work for you and your organization.