Updated: May 24
It's no secret that running a business isn't easy. While every little thing matters when you're a business owner, perhaps the most crucial aspect is managing the business finances. If you don’t manage this well, you can quickly find yourself in a financial quandary that can have a tremendous impact on the future of your business.
That will help make your business more financially successful. Check out the 8 suggestions below:
#1 - Know Your Financial Status
To make good business decisions, you have to have a clear idea of what you're working with. For starters, you need to know about income and expenses. You also need to know about how much cash you have on hand, as well as your debt. Armed with this knowledge, you can make decisions that can help you be more financially successful. Don’t hope so…know so. Make sure your projections are realistic and fact-based.
#2 - Develop a Concrete Business Plan
Once you know your financial status, you should develop a clear plan outlining your future. Think about how you want to grow and create a plan to make that happen. For example, if you want more employees, include that in your business plan. If you're going to expand your store, website, and/or add more marketing efforts, be sure to include that in your plan as well
#3 - Know Your Daily Costs
Many business owners don't know how much they spend daily, putting them at a distinct disadvantage. By knowing your daily costs, you'll know where to make cuts and you'll be able to determine whether you can afford certain expenses. For example, if you spend $200 a day on office supplies, you may want to consider if you can afford to give your employees more days off.
#4 - Get Your Customers to Pay on Time
While it's critical to get customers to utilize your services, it's also essential to get them to pay on time. Customers who pay late can wreak havoc on your business finances. It's vital to set clear terms and provide accountability for their prompt payments.
#5 - Control Your Inventory
You can't possibly sell everything you have on hand, so you must learn to control your inventory. If you have too much inventory on hand, you may have a hard time selling it. This can end in loss. On the other hand, if you don't have enough inventory on hand, you might not have what your customers are looking for, so they may decide to shop somewhere else. Keeping a balance on inventory amounts will benefit both you and your valued customer
#6 - Prioritize Accounting
Many business owners think about accounting after everything else, but this is a mistake. You should always think about accounting first and then act accordingly. For example, you might decide to put off hiring a new employee if you don't have the cash to do so. Maintaining diligent and balanced accounts means better-informed business decisions.
#7 - File Your Taxes on Time
Filing taxes on time can be a real challenge for businesses. No matter how good you think you are at accounting, you're likely to struggle in this department. You should keep up with your records and make sure your accounting software is working properly. You may want to consider a professional account/bookkeeper to manage this for you.
#8 - Deal With Problems as Soon as They Happen
Managing problems responsibly to a minimum is vital for financial success. As a business owner, you'll face many issues like defective products, employee lawsuits, or running low on inventory; the list of detriments is endless. Being diligent, fair, and timely will keep a spark from becoming a full-on fire.
As a business owner, managing business finances are a critical component of success. Many business owners make costly mistakes because they don't have proper financial management skills.
If you’re looking for a financial advisor in Albuquerque, call LPL Financial Advisor, Michael R. Rose! Michael and his team are experienced professionals who can guide you in planning a better financial future.