Entrepreneurs get into doing business for many different reasons, and come from a huge variety of working backgrounds. You may have begun a business because you’re passionate about graphic design, or you think you can make a difference through organisational change. Not many leaders start a business because they are passionate about business finance, unless they happen to be running an accountancy firm! And yet balancing the books is obviously one of the most important tasks for an entrepreneur. In the early days, when income is likely to be lean as you start to build a client base and get those payments rolling in, and yet are faced with high initial outlays like renting office equipment or investing in software solutions, cashflow can be slim.
Many a promising business with great potential has folded due to immediate cash flow, so paying close attention to the books on a regular basis is essential. Knowing how your revenue and your expenses stack up each months means you can make better business decisions. So how can you make sure you’re on top of things?
Separate Business And Personal Finance
When you first start out, the line between your personal and business finance can be a little hazy. But it’s definitely a mistake to muddy the waters between your own budget and that of your fledgling business. For one thing, it makes tracking and accurately projecting your spending much more complex. It also creates difficulties when it comes to tax. Hiring a tax accountant can help to ensure that you are legally compliant and don’t get any nasty surprises further down the line.
Invest In Some Accounting Software
There are lots of cost effective finance software packages available to help you get control of the money side of your business. Solutions like QuickBooks can help you to generate invoices, manage remittances and automatically chase late payments. Choose a system which is cloud-based to allow ultimate flexibility. You can then access it anywhere as well as having a real-time insight into the state of your business finances at any point.
Always Plan Ahead
Making financial planning a part of your business process is definitely the route to follow. You’d be surprised how many small business owners make financial decisions on the fly, but if your ambition is to grow a stable business then crunching the numbers needs to be something that is carefully thought out. Look ahead to understand what planned expenses could be coming up, such as a move to a new office or a project like developing your website which may need funding. Use your negotiation skills with suppliers to broker a good deal on any resources that you need to buy in. Always err on the side of caution when it comes to what your business is spending, especially as income can initially be patchy and uncertain. Work towards a position of building some cash reserves for your business as soon as possible.
The quicker that you can make things stable, the more chance you have of navigating through tough periods and weathering any storms which come your way.
- This post has been written by an outside source – See Disclosure Policy
