Keeping on top of finances could be challenging for lots of small business owners. Usually, the reason for your business’s success is the skills you put in to running it and ensuring that you’re providing top-notch services or products.
So if you don’t have adequate experience in finance, managing finances could feel daunting or boring, and you could be doing poor financial practices without even knowing it. That being said, here are some helpful things you can do to keep track of your small business’s finances.
Ensure that Your Billing Strategy Works
All businesses have clients that are consistently late when it comes to fulfilling payments and invoices. Managing your cash flow is a key part of managing your business finances. This will ensure that you’re operating at a solid financial level. Remember, too much cash held in unpaid invoices could result in cash flow issues, which is a common cause of failing businesses.
Besides Expenditures, Focus Also on Return on Investment
Measuring ROI and expenditures could provide an in-depth picture of which investments are working and which ones are not. For this, you need to focus on each of your expenses’ ROI. Failing to do this might end up in your business losing money on bad or irrelevant spending habits.
If a business expense simply isn’t giving you sufficient ROI, cut back or cut it out so you can focus on spending on other initiatives that will work for you small business.
Stay On Top of Your Personal Credit
Your personal credit rating as a small business owner has can significantly affect your business’s ability to be eligible for credit items. This applies even if your small business has excellent credit since lenders will evaluate your personal credit to help gauge your ability to manage a business loan, for instance.
Remember that having a great personal credit history will enable your small business to qualify for better and more loan products. Likewise, make sure that your small business’s bank account is separate from your personal banking account.
Keep Track of Your Books
Allot some time daily, weekly, or monthly for reviewing your books. This applies even if your books are being managed by a bookkeeper. Doing so will enable you to become familiar with your business’s finances and keep potential crime at bay. Otherwise, you’ll be opening your small business to inefficient spending or worse, embezzlement.
Set Up and Implement Sound Financial Protocols
Setting up and implementing sound financial practices, even simple ones like regularly reviewing and updating your financial details could go a long way towards safeguarding your business’s health. Staying on top of your business’s finances will also help you mitigate risk or fraud.
Weak financial protocols could result in employee theft or fraud, and could potentially get you in legal trouble if you or one of your employees, even inadvertently, fail to abide by specific laws.
Invest In Your Small Business’s Growth
If you are looking to grow, attract top talent, innovate, and shake up the industry you’re in, you should invest in your business’s future. Your employees will surely appreciate that you’re investing in your business and, in turn, their careers. Also, your customers will appreciate your increased service level and offerings.
Lastly, don’t forget to pay yourself. When running a business, it just makes sense that you put everything into its day-to-day operations. But you should never overlook your own role in your small business and you must compensate yourself accordingly.
Keep in mind that you’re a key component of your business so you should pay yourself as you do your employees. Also, this way, you’ll be more inclined to keep a close eye on managing your finances.
