As a small business owner, you have so much on your plate that sometimes you can’t see the bigger financial picture. Lucky for you, here are a few tips to keep your financials intact, while you get to the business of business.
Budget your spending. The best way to run your small business is to know how much money you need to make in order to break even and how much you have to spend to run your business on a daily basis. Separate your business budget into 4 categories:
- Prospective income
- Fixed expenses
- Variable expenses
Don’t spend. Invest. Spend your hard-earned money on things that will reap long-term benefits. Every expense has two sides: current benefits and long-term benefits. Businesses that spend on a long-term investment nature reap its benefits much longer. But remember to balance the cost versus the benefit. If your expense doesn’t directly help you in increasing your business or quality of your work, don’t spend it.
Maintain records. Keep all receipts, organized, in a safe place where you will be able to find them when you need them. The top four reasons for lost records are:
- They simply weren’t kept
- They were kept but are so unorganized you can’t make sense of them
- They were kept very organized but got washed or destroyed
- They were kept safely and organized in a place but you can’t find them. (Spend a few minutes a day to organize your documents and avoid losing anything.)
Separate your personal and business bank accounts. It’s easy to lose track of your cash reserves and keep funding your business expenses from your personal account. You work so hard on your business, only to find out at the end of the month that you don’t have money left to pay for your living expenses. To avoid this, pay your business expenses from a dedicated-for-business credit card with a fixed credit limit. This gives you the flexibility and control to plan your cash in-flows in order to meet your cash-outflows.
Be lean. A business has two types of costs – fixed costs and variable costs. Fixed costs are like body fat. You have to bear the weight whether you make money or not. Instead of buying expensive, proprietary software, try working with free and open source software. Also, try getting a free online phone number forwarded to your cell phone, or try Skype meetings instead of travelling long distance. Maybe try even bartering for much-needed services with professionals (for example, help an accountant with their marketing material in exchange for a free tax return, etc.). Be lean without diminishing customer satisfaction.
Sometimes having a little financial adviser in your corner, looking out for your best interests is the best call. Take a few minutes, and see what a chat with William Wolske can yield. With over 40 years of experience as a CPA, and, a business owner himself, he can help you avoid the pitfalls that can occur. Schedule your free consultation today.