Whether you are operating a small or a medium-sized business either as a seasoned veteran or as a newbie, you understand that efficient money management is an ingredient to a successful business. However, knowing something and actualizing it are two different items. Therefore, you need to think about a refresher course on financial management for medium-sized entrepreneurs. The following are hints to get you started.
Save cash wherever possible
Ways to save cash on your business overheads are endless. While some of them are market specific, here are some quick hints:
- Market your products on the social media. It’s free.
- Get your workplace audited for energy cost.
- Order your computer system from Amazon and eBay.
- Take advantage of cash discounts offered by major office suppliers.
- Get vehicle title loans for short term financing.
Come up with a working budget
It’s practically impossible to manage your cash without a spending plan. Sit down and single out your daily and monthly expenses. Balance your revenue with your expenses. Adjust wherever possible, but ensure each department is allocated enough funds. Setting up a contingency account is a good idea just in case the unforeseen happens.
Consider hiring an expert
The aspect of money management can be tedious. In case you don’t like staring at spreadsheets and crunching numbers, it’s time you think about employing an expert to manage your finances. Contracting an accounts payable clerk or a general accountant will let you concentrate on tasks you’re best in.
Keep an eye of the petty cash account
Know who accesses your petty cash account and how that money is managed. It may seem simple, but this expense adds up so fast. Clearly state what the petty cash will be used for to minimize unnecessary expenditure.
Expand with caution
While expanding your business may be one of your key goals in your strategic plan, a lot of caution must be observed to avoid a financial crisis. It’s logical to think that expanding your business should be the next step once you start experiencing some success, but wait. It calls for extra money, time and effort. Take one step at a time and you’ll not be disappointed.
Keep track and improve your cash flow
There are several ways of balancing the difference in your troubled cash flow. For instance, you can hold off bill payment for a few days provided this won’t incur penalties. Also, you can decide to offer cash discounts on customers who settle their accounts promptly. However, these strategies must only be for a short-term. Get back to business soon after your cash flow is healthy.
Define your potential risks
Every business undertaking is exposed to some amount of risk. As a small business owner, you need to take into account short-term and long-term risks to appropriately plan their financial impact. Once you map out the risks to productivity, you’ll have a clear picture pegged on insurance requirements and contingency planning.
You need to separate business funds from personal funds. This will help you stay organized, manage tax payments, and keep track of your financial records. This will also be important if you decide to change the business ownership. You could possibly have a separate credit card for your business expenses.
Invest in cloud based applications and an accounting software
Consider having a low-cost accounting software for your small business. It should enable you meet your basic accounting requirements and track your expenses. Using a good accounting software helps you save time, keep track of important business information, for starters, expense reports, income, client information, invoices, receipts and credit notes. Mobile as well as cloud-based applications is another low-cost accounting solution.
Monitor sales cycle
You should account for expenses during an off-season if your business has a slow period. At this time, you’ll get reduced revenue, but some of the expenses are likely to remain constant or move up. Use your slow period to plan for your next boom. This is an appropriate period to ramp up your marketing strategies.
Money management is pretty simple when you get organized. Keep an eye on your expenses and record keeping. This will enable you increase your margins, plan for future expansion and lengthen your business life span.