FINANCIAL discipline is a strong determinant of whether or not a small business will succeed.
Even more critical if your business is being funded by a loan, you have to be more accountable with your business finances. The following tips will be useful for small business owners in managing their finances.
Set up company account
Opening a corporate bank account, especially as a limited liability company, positions a business to gain access to more financing opportunities.
Organize your finances
The need for diligent keeping of records by entrepreneurs cannot be over-emphasized. Keeping invoices, receipts, and recording transactions would equip any business owner and potential investor with information required to make prudent business decisions.
Separate business from pleasure
Separating business finances from personal funds is essential in managing business finances. Being self disciplined is a “major key” to managing your business finances.
Where an entrepreneur allocates a certain amount monthly as salary, there is less likelihood to use business funds to take care of personal needs. Paying oneself is a healthy way to test the profitability of a business, as the true position of a business’ finances can be assessed.
Minimize operating costs
Outsource and leverage sharing as much possible. At the early stage of a business, it is okay to outsource certain functions. For every employee hired, the company has to pay, not only, salary but all other relevant contributions which make hiring cost high. Instead of hiring an accountant, a marketer, a lawyer, outsource these roles in the early days. Also take advantage of co-working spaces to share operational cost. You can even barter services sometimes, i.e. provide a service in exchange for a service you need.
Join small business association
Joining a small business association would enable you grow your network. It would also position you to benefit from product discount offers these small business associations have with suppliers and vendors. These small business associations organise thrifts which could provide a source of capital for a business and also have exclusive access to certain government funding initiatives.
Pay your taxes
Remitting taxes could actually help you save money. Non-remittance of taxes and levies could amount in huge penalties and fines for a small business in the future. In hindsight, the business owner would realize that prompt remittance of taxes saves time and money.
Get alternative payment channels:
The less a business owner handles cash, the less the risk of theft or unplanned spending. It pays to adopt various payment channels like debit cards, mobile payment, POS terminals and even online bank transfer.
Embrace technology to keep your books. Softwares such as Wave, Accounteer, Invoice.ng, and Payant are softwares that small businesses can use to create invoices, track bank balances and any other transactions. Products like eChange can be also used to give customers their balance (i.e. change).