Running a small business can be exhilarating and exhausting in equal measure, so it’s well worth taking steps to make your life a bit calmer.
First and foremost, that means getting on top of your finances, so you can move forward with greater confidence and certainty about the future.
Set out a detailed budget
Work out your projected income and expenses, and list everything from office supplies and marketing costs to salaries and rents.
By itemising every single cost, you can keep a close eye on how much you’re spending and see where possible savings could be made.
Perhaps you have a software subscription that you don’t need, or you’re paying over the odds for a product or service you can get cheaper elsewhere.
If you can identify these costs quickly and easily, you’ll be able to allocate your business’s resources far more effectively and efficiently.
Make cash flow a priority
Cash flow is about having money when you actually need it, so monitor your accounts to make sure you’re being paid promptly and make your invoicing processes as quick and straightforward as possible.
You might even want to incentivise clients and suppliers to pay you on time by offering discounts for early payments.
Keep business and personal finances separate
Make sure all the money going in and out of your business is kept apart from your personal finances, so there’s no room for any ambiguity or confusion.
If you have dedicated business bank accounts, credit cards and documentation, you can simplify your accounting and make sure you’re paying the right amount in taxation.
Having a clear dividing line between your business and personal finances also means your personal assets aren’t at risk if there’s any unforeseen circumstances affecting your firm.
Create an emergency fund
All businesses can find themselves hit by unanticipated events, such as equipment breakdowns, fire or flooding on your premises, or economic downturns or seasonal trends hitting customer demand.
In that case, it’s well worth making sure you have a financial buffer in place to tide you over, ideally at least three months of operating expenses, so you can be confident of withstanding the storm and getting back on your feet as soon as possible.
Track every penny
It’s really important that you keep accurate records, so invest in accounting software to make sure all your income, expenses and taxes are clearly documented.
Not only does this make filling in your tax returns and other vital documents much easier, it also gives you an informed overview of where your business currently stands that you can use to plan for the future.
Use technology to automate manual tasks
Online tools, automation software and AI-based tools can help you free up huge amounts of time that you’d otherwise be spending on tedious manual tasks, such as paying bills and creating invoices.
Technology is there to streamline your financial processes and let you spend your precious time concentrating on what you’re good at and what gets you up in the morning.
Engage with your peers
Speak to other small business owners by attending networking events, joining local business groups and asking questions on online forums.
You can then share best practices and learn tips and tricks from your peers about how to set yourself up for long-term success.
Improve your financial literacy
If you have a good understanding of financial concepts, you’ll be in a much stronger position to make informed decisions that shape the future of your business.
Spend time reading books, attending webinars or enrolling in financial literacy courses so you can build a deeper understanding of how your money works.
Set goals for the future
You can only measure success if you have a clear idea of what you want to achieve. So set detailed financial goals for your business, define metrics to track your progress and create a roadmap to make sure you’re on course to reach your target.
Ask for help
There is plenty of support available for small business owners who need guidance on managing their finances in the short and long-term.
Our expert financial planners can help you navigate complex financial decisions and give you confidence that you’re taking the right steps to secure a bright future.
If you have any questions on managing your business and personal finances, please don’t hesitate to get in touch and we’ll be happy to speak with you.