9 Easy Finance Tips to Make Your Small Business SucceedWritten by Bernard on September 19, 2016
Starting your own business can be difficult even with great finance tips. From learning how not to burnout in the early stages, to using social media correctly for your online presence, there’s a lot of stuff you need to cover.
But the most important, for your success as a profitable business, is the financial aspect. You have to take care of your finances if you want to succeed.
Most small business owners are not finance experts—they have an overall strategy, but they don’t like to pore over Excel spreadsheets and do endless reporting.
So today we’ll look at the 9 best finance tips to help entrepreneurs and small business owners succeed.
Don’t put off your financial responsibilities
One of the best finance tips is to stop procrastinating when it comes to sending invoices or creating expense reports. But what you don’t want to do is put it off until that magical time called ‘later’ because it rarely comes. What ends up happening is you have too much work that you’ve put off for far too long, and it’s coming back to bite you.
For most small business owners and entrepreneurs, you can take care of these things easily with tools such as InvoiceBerry, which has simplified the invoicing and expense tracking software.
Whatever you do, though, don’t delay. Divide it into manageable categories (sending invoices, tracking and categorizing expenses, paying employees, etc.) and just do it.
Educate yourself on important statements
The best thing to do, besides just surviving through your financial reports, is to educate yourself so they become easier. You need to know your four essential financial statements – cash flow, income, balance sheet, and statement of shareholders’ equity.
Your cash flow statement will measure your investments and your operating and financing activities. Your income statement shows how much revenue you’ve earned in a certain time period. Your balance sheet concerns your assets, liabilities, and shareholders’ equity. And the statement of shareholders’ equity discusses the amounts that the company is financed by way of common and preferred shares.
Get yourself familiar with these statements now to save yourself headaches in the future.
Separate your business and personal finances
Don’t mix your business with pleasure, at least when it comes to financials. Keep your business finances separate from your personal finances. This will help you track your expenses more accurately and keep your spending under control.
While you’re at it, be sure to use separate bank accounts, get a business expense or credit card, keep your receipts separate, and pay yourself first. These are only some of the most important finance tips you’ll need to do in order to separate your business and personal finances.
For more in-depth information, with much more tips, check out our blog Why You Should Separate Your Business and Personal Finances.
Understand seasonal cash flow
All businesses have seasonality—times when it’s really up, times when it’s medium, and times when it’s low. This could be a year-by-year sales cycle, but mostly it’s seasonal.
Christmas lights man has a huge sales spike from Halloween until the New Year, but then it tapers off. He sells party lights the rest of the year, but the sales are not as strong. You may not sell Christmas lights, but your sales are definitely going to have seasonality.
Now that affects your cash flow as well. It’s best to keep a buffer in your reserves from your high sales so you can survive the low sales. Your business needs cash flow to stay afloat, and accepting that seasonality is tough. But if you want your business to survive, first see what your cash flow seasonality is and learn to prepare for it.
Ask for discounts
Surprisingly, getting free or lesser-priced stuff is easier than you could imagine. Many small business owners I know, especially SaaS ones, tell me that they’d happily give away stuff for free or a reduced price. If someone asks.
If you’re having some tight financial times, don’t be afraid to send out an email to companies asking for support. Sure, you won’t get a 100% positive response—if you even get a response—but you’ll be surprised how many other businesses are willing to help you out.
You know why? Because they’ve been through it, and although it can be a dog-eat-dog world sometimes, people are still willing to help you if you ask them.
Cut variable costs
As the saying goes, “Sometimes you have to spend money to make money.” The operative word there is ‘sometimes.’
But let’s look at your two costs—fixed and variable. You have no real say in your fixed costs, whether you’re in an upswing or localized recession. But with your variable costs, there’s a lot of wiggle room. Instead of traveling across the country, use free online calling. Instead of buying the Microsoft Office Suite, get Open Office or use Google Docs.
Before you purchase something, ask yourself whether this product or service is needed, whether there is a free or cheaper but similar offering, and whether the intended value justifies the price. It can be tough in the beginning for each purchase, but it will save your big in the end.
Invest in cloud-based invoicing software
You can go ahead and download free templates, such as InvoiceBerry’s free business plan and accounting templates, or our free Photoshop, Word and Open Office invoice templates. They are wonderful and extremely helpful. But the best thing to do is to use cloud-based software, and that’s where InvoiceBerry comes in.
Online invoicing software such as InvoiceBerry will allow you to store, update, track and access your business and customer information wherever and whenever you want. It takes a lot of the responsibility off your hands, and you can travel, work at home or office and know that you can work with your data anywhere and at anytime.
Monitor & measure financial performance
For strategic business goals, you need to have a thorough business plan in place. For your more specific goals, use the SMART goal-setting system. This is especially crucial for your financial goals and one of the most important finance tips.
You’ll need this in order to measure and keep tabs on the movement of your money. Consistently monitor and measure your financial performance, compare it to the past similar time period, and then try to set better and better goals for future revenue, cash flow and expenses.
Get some help
When in doubt, get some help. The number one mistake most entrepreneurs and small business owners make from the get-go is putting everything on their shoulders. They do it all, the small business Superman. They do the accounting, marketing, customer service, fix the lights, make the coffee, install the antivirus—and then burn out in less than 3 months.
You get much more than you lose by hiring expert help. What you lost—some money for the costs—is more than offset by the expert advice and guidance that saves you lots of wasted time and energy.
It will allow you also to focus on the other parts of your business, because multitasking in many ways is a myth. Focus is necessary for success, and you’ll need help to take care of the other parts of your business so you can succeed and eventually expand.
To sum up…
Owning your own business is amazing, exciting, depressing and exhilarating at the same time. But in order to continue on the good path, you’ll need to take care of you the money with these finance tips.
There is a difference between ‘tough times,’ which everyone goes through, and ‘bad money management,’ which hopefully you won’t go through. Take charge of your finances and watch your business succeed.
Do you have any other great financial tips you’ve learned in your business? Let us know in the comments below!