You could have top-notch products and first-rate services, but you still have to close your doors for good if the money just isn’t there. Follow these important money-management tips to keep your finances in order.
1. Always Have a Back-Up Plan
You always need to have a Plan B, even when it comes to your finances. Plan B could be a stash of cash reserves sitting in a separate bank account. Or you could go to a website like firstdownfunding.com to get access to fast financial support so that you can get through a tough situation quickly.
These are some examples of emergencies that will cost you a pretty penny to fix:
- Broken windows
- Flooding basement
- Leaking roof
- Frozen pipes
- Electrical failure
- Equipment breakdown
Pulling money from your regular budget could ruin your cash flow, causing rippling effects on your payments for months to come. You don’t want to miss an important bill because you repaired a plumbing problem a few weeks beforehand. As the saying goes, it’s better to be safe than sorry.
2. Don’t Mix the Personal and Professional
When you start your company, you should open up a savings account and apply for a business credit card. You should not use your personal accounts or cards to make purchases for inventory, pay off bills or cover any other business costs that you can think of. The professional and the personal shouldn’t mix.
One of the reasons for this is that mixing your personal credit card with your business expenses can make bookkeeping much more of a challenge.
You’ll have to sift through every single purchase on your bill and try to remember if it was a professional or personal expense. It’ll be much more organized to keep the two payment methods separated.
Another reason is that you should take the opportunity to build up your business credit with your card. This type of credit is different from your consumer credit, showing up on a completely different credit report. With an impressive score, you can have a better chance of acquiring business funding. The strategy will help you years down the line.
3. Always Go over the Numbers
You should always double-check your numbers, whether it’s the money left in the till or the savings in your account. It’s a good financial habit that will help you keep track of your funds and notice when anything is amiss.
For instance, you could be dealing with a case of employee theft. It’s a popular crime that costs businesses $50 billion annually — this covers everything from embezzlement schemes to sneaking bills from the cash register.
So, how do you go over the numbers? You can hire an experienced bookkeeper or an accountant to go over your business’s finances.
Or, if you’re worried about having another set of eyes on that sensitive information, you can always learn basic bookkeeping skills and do the job on your own. Sign up for a class or download accounting software designed for small businesses.
These are three essential tips that can help you manage your business’s finances. They’re simple enough to follow, so there’s no reason why you should have to close-up shop and admit defeat any time soon.