Managing your money as a small business owner is critical to your success. Be it your business finances or your personal finances. If one or both are in disarray, chances are you’re not operating to your full potential, and you will be making grave mistakes along the way.
But now, can you improve your finances as a small business owner?
Separate Your Finances
If you haven’t already, you must ensure that you have both personal and business finances separate. It can be tempting to merge them together. After all, the money from the business is yours, but this can be disastrous for the running of the company as there is no separation of what money is meant for the business and what you are living off.
Pay yourself a wage and ensure you have both personal and business accounts to help you keep order in your finances.
Make A Budget
A budget is vital for running a business and for your personal spending, too. Knowing how much you need to keep going and cover your essential costs can give you an idea of what you need to be making each month and allow you to make smarter money decisions regarding your spending.
You need to include the money you expect to bring in and what needs to go out, and the remainder is to help you plan your cash flow and avoid money problems.
Automate Bill Payments
This is something that can change how efficient you are when it comes to staying on top of your bills. If you have regular payments you know you will need to make, then you should be automating them as standard. The last thing you want is to be hit with late payment fees or fines for missing deadlines; however, if you’re not automating payments, these are a real possibility and will eat into your cash flow. Use online banking, adjust your payment schedule and work towards full accounts payable automation to streamline your expenses and never miss a payment.
Save for Retirement
As a small business owner, what you do when you retire and how you plan for it shouldn’t be overlooked. In many counties, paying towards a retirement fund for either yourself or employees is compulsory if you have any.
It can be tempting to just reinvest back into the company, but you need to look at what your options are for retirement sooner rather than later. So whether this is paying into the Australian Superannuation scheme, making investments, or building savings in a high-yield account, your retirement funds shouldn’t be overlooked.
Reduce Costs
This doesn’t mean looking at your business and not paying for vital aspects that can help you to improve. It means being aware of what you are spending and trimming the fat from the budget for leaner spending.
Always be aware of what you are paying for and the value it offers you or the business. If it’s not essential, can you negotiate a better deal or stop paying for it altogether? Constantly review your numbers, be aware of what you are paying and always look for the best deal possible to save you money.
Reinvest
It is vital to reinvest back into your business. After you have paid yourself and all of your expenses, you should reinvest the money you have leftover into your company to drive growth and profitability.
The aim of the game is to make money. To keep doing this and stay relevant, you need to be innovative and look at how to do what you do better. Be it investing in new equipment, opening another location, investing in ongoing employee training and support, or whatever you need. Use any additional money to support what you do.
Reduce Debt
You should always be mindful of the debt you take on personally and professionally. While taking out some business loans is a good idea, be careful not to overextend yourself and commit to repayments you might struggle to make.
If you have outstanding loans or fiance agreements, always pay these down or pay them off as a priority over anything else. Not only does this prevent you from paying more interest, but it also frees up the payment you were making towards this to be used for something else quicker.
If you are struggling with your debt repayments for yourself or your business, talk to creditors, explain the situation and see how you can move forward and improve your situation.
Technology
Investing in technology might not seem like a way to boost your finances, but there are some ways you can do just this using tech. Technology and software are designed to make your life easier. You will need to make a purchase and spend money to integrate this into your business firstly. In the long run, the right technology can support your financial decisions and help you run smoothly, thus reducing costs. For example, accounting SaaS (software as a service) can help you to track your cash flow and expenditures to help you stay on top of your finances, while automation software can feed up time and energy for you to put towards other tasks to help you boost profits and grow how you need to.
Boost sales
Always be aware of your options when it comes to boosting sales. For those times when sales are slow or low, you need to have strategies to help you increase sales and get money coming in.
These can be things like flash sales or creating bundle offers. You can offer loyalty discounts for existing customers or introduce a referral scheme to bring new people to you. Knowing what can work for your company and how and when to employ these tactics can allow you to support quieter times throughout the year and ensure that your profits are up and you aren’t losing money unnecessarily.
As a small business owner, your personal and business finances are integral to your success. In the first instance, never merge two sets of finances and ensure you know exactly what is going on with every cent you have and that you are spending it wisely.
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