Any business needs money at its core to keep it alive. Proper financial management is critical for any business. Without proper management, even the best ideas can fail. To smartly and sustainably grow your business, you need to get serious about managing your finances. Here’s how:
1. Separate personal and business money 🔀
The vast majority of small business owners that I speak to make the mistake of having their personal and business money co-mingle. You need a dedicated bank account for your business. This keeps things organized but is also useful when you are filing tax returns or keeping track of your business’s quarterly performance.
2. Create a monthly budget 🧾
The budget can be thought of as your financial roadmap. It answers 2 big questions for you, how much do you expect to earn, and how much do you expect to spend, in expenses such as rent, salaries, marketing, supplies, etc. Stick to your budget plan as best you can. If things don’t go according to plan, adjust the budget according to the numbers you will be seeing.
3. Track every shilling, literally 📊
I recommend using an accounting software such as, QuickBooks, Wave, or Zoho Books to aid in tracking your cash flow. Know where your money is coming from and going to as often as possible. You can’t go wrong by being as versed in your finances as possible. You don’t want any surprises, so you must stay on top of it!
4. Create an Emergency fund 🛡️
Unexpected expenses occur from time to time in business. A customer may delay in paying or a piece of equipment may stop working. Make sure to have at least 3-6 months worth of operating expenses set aside to safeguard your company from choppy waters ahead.
5. Use your profits wisely and reinvest 📈
Otherwise known as using those profits to invest back into the company. Hire skilled help. Buy tools, improve customer experience! No matter what you are spending money on always consider the risk involved with the decision before spending! Smart investment are investment that pay off in the long run.
6. Track profitability, not revenue! 🧠
Take care not to be “blinded by the light” sales volume! It isn’t what comes into your business that matters ultimately, rather it is what is left after the expenses are deducted. Always monitor your profit margin to make sure your business is getting larger and not simply hanging on to life.
7. Hire a Professional 👨💼
If numbers aren’t your thing, make sure to hire someone who is! Accountant or financial advisor, whatever you need–find someone! A small amount of professional help could prevent you from making a huge misstep and also allow you to open up potential growth opportunities.
Finances is your future. Manage them wisely, spend wisely, and let every dime work for your vision. Business success is not simply about making money, it is in fact very much about managing those dollars positively. ✅
