As a small business owner, it can sometimes feel like an overwhelming task having to balance business finances along with the other responsibilities of running a business.
It’s important for both your business and your personal finances for you to have a good understanding of managing money and how it can be handled wisely. So, in the guide below, we’ve listed some tips and advice to help you manage your business’s finances. Keep reading to learn more.
Monitoring Business Finances
It’s important to ensure you monitor your business’s finances and performance so it’s possible to identify where there may be any areas that could require an improvement. If there is an area of your business that is not performing well in terms of profit, then it’s worth considering moving investments into another area of the business. Hold regular performance reviews for the business and ensure any managers you employ are keeping on top of business finances too. Maintain a high level of communication with your accounting team to give you a clear idea of your business finances and movement of money.
Business Accounting
Business accounting is essential for any organised and well-managed business. It gives you an important view into your business finances, profits, spending, and where money is mostly being spent. Regular accounting reports will provide you with the opportunity to review finances and make any necessary changes.
Monitoring And Tracking Invoices
Keeping on top of monitoring and tracking invoices allows you to understand how much money is going into and out of the business. Keeping control of spending and knowing how much money is coming into the business is essential in order to keep control of the business’s finances.
Investing Back Into Your Business
Investing some of the money made from your business back into it is important as it is what it needs to be able to grow and expand. Consider spreading investments over different areas of your business so that multiple aspects have the opportunity to flourish. By investing in different areas of the business such as marketing, sales, customer service, etc. you’ll be able to see which parts of the business provide the best success after receiving investment. You can then focus investing money made back into the areas that help your business thrive the best.
Investing money back into your business rather than taking as much money for profit as you will also set a good example to your employees. It shows that you’re willing to invest both in the business and in your team, rather than just trying to just make as much money for yourself as possible. Making sure to invest in training for your staff, team-building exercises or days out, and other things that can benefit your employees will earn you respect from your team and make for a happier workplace.
Maintaining Good Credit For Your Business
Maintaining good credit for your business will benefit you should you wish to apply for loans for your business in the future. It’s important to make sure that you’re keeping your personal and your business finances separate as a small business owner. Any poor credit you build in your own personal finances can affect your business’s credit score. If you’re taking out any loans for your business, then make sure they are paid back in full in the specified time period to avoid a negative effect on your business’s credit score.
How To Find Out What Your Business’s Credit Score Is
The credit score you receive for your business could vary slightly depending on the company carrying out the credit search. However, you can find your estimated credit score by using a business credit reporting company. This can usually be done online and doesn’t take long.
How To Improve Your Business’s Credit Score
If you find out your business has a poor credit score, it’s best to try and improve this to prevent it from holding you back in the future for things such as hiring equipment or taking out business loans. Make sure to pay all bills for your business on time, file returns before the deadline, and keep your information up to date with other companies. If you don’t think you’ll qualify for credit, then avoid applications as each failed application has a negative effect on your credit score.
Payday Loans
If you have large payments you need to spread out, such as buying business equipment, etc., then using a payday loan can help spread the cost. Using a loan such as this to pay off the cost of equipment provides you with the funds to pay for the equipment without having a large upfront cost. Payday UK is a broker that can help find you a suitable small personal loan, paying out as quickly as 15 minutes. This loan can cover expenses in your personal life, so you can get on with managing your business.
Changing Business Utilities
Keep an eye on the costs of your business utilities each month. Research other providers and their pricing if you notice them starting to rise. If you find somewhere cheaper that provides the same service you currently have, then make the switch to save your business some money.
Renting Versus Buying
When choosing the equipment you will need for your business, it’s not always necessary to fork out huge amounts on buying it. Renting equipment can be a great way to save money and avoid buying equipment for the short and long term. It also makes it easier to get rid of equipment if you find you no longer have a use for it in the future.
Insuring Your Business
Taking out business insurance can help to protect your business’s finances during accidents and legal actions taken against you by customers and employees. For example, business insurance covers things such as damage to property and unforeseen financial circumstances. It can help your business to avoid going under due to big losses. So, even after a hugely damaging event such as fire and damage to equipment, your business can carry on. General liability insurance helps to cover your business’s finances when employees or customers choose to make a legal claim against you due to illness or injury on business property.
Make Sure To Pay Yourself
As well as investing money back into your business and your employees, you need to make sure you receive payment from your business for all your hard work too. This could look vastly different at the start of your business launching and a few years down the line when your business is making bigger profits. It can take some time to learn how much of the business’s profits to use as payment for yourself. You will have to learn how to balance investing money back into the business and investing in yourself.
Keep Business Accounts Separate To Your Personal Finances
It’s important to make sure you keep business and personal finance accounts completely separate. This allows you to track your business finances more clearly and control all money going in and out. It will also help to prevent you from spending too much of your own money on the business rather than reinvesting business profits.
