Running a business is going to require you to keep a close eye on a million and one things at once. From making sure that you’re sticking to your original business plan to monitoring which of your products and/or services are selling, you’ll need to play a part in every single aspect of your company.
But at the end of the day, you’re going to have one simple goal: To make as much money as you can. It’s why your small business finances should be so important to you.
We’ve put together a handful of financial tips for small business owners that should help you accomplish this goal year after year. As long as you take our small business advice while managing a business, you should be able to make money hand over fist on a regular basis.
Here are ten financial tips that all small business owners should follow to ensure they aren’t missing out on the opportunity to make money.
1. Come Up With a Budget for Your Small Business at the Beginning of Each Year
In recent years, surveys have shown that up to 60% of small businesses don’t take the time to put an official budget into place at the start of each year. With this in mind, it shouldn’t come as a surprise to hear that many small business owners struggle with financial issues.
If you want to steer clear of these issues, you should make it a point to come up with a budget for your small business at the beginning of every year. It might take you a few years to really get the hang of doing it accurately. But if nothing else, creating a budget for your small business will force you to pay closer attention to how you’re spending your company’s money.
This is easily one of the most important financial tips for small business owners. You aren’t going to be able to keep a small business around for very long if you don’t get into the habit of creating and using budgets.
2. Make Informed Spending Decisions Based on Both Your Budget and Your Own Intuition
You don’t necessarily need to agonize over every single dollar that your small business spends. But you should put some real thought into any big purchases that you’re going to have to make on behalf of your business.
First and foremost, you should consult the budget that we just mentioned to see if you can afford to make a big purchase. If this purchase is going to chew up a sizable portion of your budget, you might want to hold off on making it until you’re able to budget for it better.
But you should also look beyond just your budget and use some of your business intuition as well. You don’t want to “go with your gut” every time you need to make a big decision related to your business. But your intuition should be one of the factors that comes into play when it comes to small business finances.
3. Use Technology to Keep Tabs on Your Company’s Income and Expenses
It used to be relatively difficult for small business owners to keep tabs on all of their company’s income and expenses. Back in the day, they had to calculate these things by hand, so they couldn’t always stay on top of the money that they were bringing in and spending.
But nowadays, technology has made it super simple for small business owners to see where their company stands with a quick glance at their computer. You can see your company’s income and expenses in real-time and use this information to make tweaks to your financial plans when necessary.
4. Automate Your Regular Bill Payments to Avoid Forgetting About Them
As we alluded to earlier, you’re going to have a lot of things on your plate when you’re running a business. It’s why it’s going to become very easy for you to forget to pay all of your bills on time in some cases.
If you’re worried about this happening, you should automate all of the regular bill payments that you have to make so that you don’t have to concern yourself with trying to remember to make them. You can pay for things like your utilities and your supplies automatically without having to lift a finger.
Doing this will take at least a few things off your plate. It’ll also help you avoid encountering late fees that you might be charged if you forget to make bill payments on time.
5. Make Sure You’re Working With the Right Vendors at All Times
No matter what kind of small business you own, you’re likely going to have a handful of vendors that you work with each month. These vendors are going to provide you with products and/or services for an agreed-upon price.
But here’s the thing: That price might sound like a steal when you first start paying it. But once you’ve worked with the same vendors for a long time, you might find yourself in a position where you’re actually paying too much for the products and/or services that you receive from them.
For this reason, you shouldn’t ever just continue to work with the same vendors over and over again out of habit. You should continuously monitor the marketplace to see if you could be purchasing products and/or services from other vendors for a better price.
6. Work to Maintain a Good Business Credit Score
Did you know that your small business is going to have a credit score just like you yourself have a credit score? If not, now you know! And we should also tell you that it’s going to be up to you to get your business credit score as high as you can get it.
You should start to do this by seeing where your business credit score falls now. From there, you’ll be able to take steps to improve it over time so that you can get it as high as possible.
The higher that your business credit score is, the better deals you’ll get when you work with vendors, suppliers, lenders, partners, etc. If your small business’ credit score is in the tank, you’ll often have to pay more for, well, just about everything. A low business credit score isn’t going to do you any favors.
7. Put In Safeguards to Protect Your Small Business From Fraud
Earlier, we briefly touched on how helpful that technology can be for small business owners these days. Technology can help you to keep track of your small business finances like never before.
But there is also a downside to utilizing so much technology when you’re running a business. It could potentially leave you exposed and put you at risk of suffering from fraud.
Fortunately, there are certain safeguards that you can put into place to protect your small business from fraud. You can do things like:
- Install anti-virus software on your company’s computers
- Make sure that your company’s website is 100% secure
- Put up a firewall to stop hackers from accessing your internal network
If you don’t do these things, you could put all of your company’s financial information at risk. You could also allow someone to swoop in and steal all of your customers’ information.
These kinds of things will hurt your small business in a big way. It’s what makes it so important for you to utilize the safeguards that we just spoke about.
8. Create a Complete Financial Statement for Your Company at the End of Every Year
At the end of every year, you should have some general idea of how well your small business did during the year as far as finances are concerned. You shouldn’t be too shocked to hear that you either made a lot of money or lost a lot of money throughout the year.
But even still, you should make it your mission to create a complete financial statement for your company that showcases how well it performed in a financial sense over the previous 12 months. This financial statement should include things like:
- A balance sheet
- An income statement
- A cash flow statement
You can create a financial statement for your small business on your own if you think that you can manage it. But many small business owners will turn to a certified public accountant for help with their financial statements. They can put one together for you so that you don’t have to spend a bunch of time doing it yourself.
Either way, it’ll be imperative that your financial statement is completely accurate from beginning to end. It’s going to be used for tax purposes, investment decisions, and more. So if your financial statement isn’t right, it could cause all kinds of complications for you down the line.
9. Arrange to Have Your Financial Statements Audited by a Reliable Third Party
It’s so important for your company’s financial statements to be accurate that you shouldn’t just trust yourself or even your accountant to get them done right. Once your financial statements have been completed, you should also hire a reliable third-party company to conduct what is called a financial statement audit.
The word “audit” usually sends shivers down a small business owner’s spine. But not to worry! This isn’t the kind of audit that you’re thinking about.
In this case, an audit will involve a company going through your financial statement line by line to make sure everything is correct and accounted for. They could prevent you from encountering big problems later on by catching any mistakes that may have been made when your financial statement was being put together.
It never hurts to get an extra set of eyes on your financial statement. It’ll be well worth the money that you’ll need to pay to have an audit done on it.
10. Build Up Your Savings Over Time to Provide Your Small Business With Wiggle Room
A lot of small business owners live by the motto, “You have to spend money to make money.” They take almost every dollar that they bring in and find a way to reinvest it back into their business.
When you’re first trying to get a business off the ground, it isn’t the worst idea in the world to try to reinvest a lot of the money that you’re making back into your business. This is going to be one of the keys to getting your small business to grow.
But at the same time, you also don’t want to spend all of the income that you bring in and leave yourself without any savings. This could be a recipe for disaster if your small business ever has to try to survive through a few slow months without any cushion in your business savings account.
It might be challenging to build up your savings quickly right away. But you should attempt to do it over time so that your small business will always have the wiggle room that it needs if you hit a rough patch.
These Financial Tips Should Help Your Small Business to Enjoy More Success
The truth is that this is really only the tip of the iceberg when it comes to financial tips for small business owners. We could sit here and rattle off 100 more small business tips pertaining to your company’s finances.
But these financial tips should serve as a good starting point for you and your business. By implementing as many of them as you can, you should be able to improve your small business finances in a hurry while making managing a business so much easier on yourself.
Are you interested in getting your hands on some more useful small business tips? Find them by browsing through other articles posted on our blog.