Small business financial management – Our two cents on the matter
Good financial management is crucial for every business to survive. Making better financial decisions can determine the longevity of your business. Here are tips to assist you in managing small business finances.
Educate yourself – Financial knowledge is power. You make better and more informed decisions when you are equipped with the correct resources. Educate yourself on various aspects of finance, from your income statement, balance sheet to cash flow. Understanding your financial statements will assist in analysing the your operating efficiencies.
Plan ahead – Unforeseen challenges may arise in business, but plan ahead and do some scenario planning so that you can resolve issues quickly.
Separate business and personal finances – The biggest mistake you can make is to book a holiday to Mauritius with a chunk of your business finances! This can happen if you don’t separate your business finances from your personal. Maintaining separate accounts helps keep track and control of all business expenses.
Cut costs – All businesses have fixed and variable costs. Keep fixed costs in check and always seek the most efficient and cost effective method to save on variable costs. For example: Buy ZipZap mPOS in order to accept card payments from customers at a low upfront cost with low transaction fees that are deducted daily. Funds from transactions are deposited directly into your business account.
Hire professionals – Taking shortcuts with your finances can cost you. Hire a professional to assist you, even if it’s on a part time basis. It often pays off to engage with an expert, who can help you determine the direction of your business by analysing your data. Whether it is current expenses for the year or financial planning for upcoming months. Ensure that you find someone reputable and trustworthy.
Monitor and manage expenses – Stay on top of your game! Finances are the heart of your business and they drive it. They shouldn’t be handled as an afterthought. Set aside time every day or every week to review your business expenses. You should never leave this in someone else’s hands. This process familiarises you with your financial pattern, and helps you to foresee potential liabilities that might lie ahead.