Small business owners have been hit by the force of the COVID-19 pandemic harder than anyone else in the country. Businesses have struggled through challenging and unprecedented times, and are finally growing back to a place of financial security after a whirlwind few years. Things are very different now than they were before the pandemic, but here are a few ways in which you can manage the finances of your small business and stay on track for your best year to date.
Stay on top of day to day money management.
Properly manage your accounting – Hire a bookkeeper or purchase some DIY accounting software. It is crucial that you are accurate in keeping track of your income and expenses.
Review your costs – Keep track of all of your small business costs, which can add up quickly, however reviewing them allows for fine tuning the direction of your expenses.
Consider an app for expenses – Mobile apps make it easier to keep track of what is going in and out without putting in too much effort or taking time away from any of your other business activities and necessities.
Keep invoices on track – Send out invoices as soon as possible, set payment terms, follow up on invoices and cross reference with payments. Never allow an invoice or missed payment to slip through the cracks.
Separate business, pleasure and private accounts.
Keep a separate business bank account – Mixing business money with your personal finances is a recipe for disaster of unexplained losses and tax headaches. Keep your business and personal finances apart.
Pay yourself first – Don’t suck up all of the profits, but make sure to benefit from your gains. Set money aside constantly from your business and test the profitability of your business.
Remain frugal, tighten the belt where needed – Even though you pay yourself, don’t get sucked up in the benefits of business ownership even if you can afford it. Set your salary as low as possible and offer reasonable benefits to your staff. What you save now will give you future leniency and help you grow your business.
Take care of the bigger business issues.
Don’t let legal fees get out of hand – Legal services are notoriously expensive, so find a way to manage the cost. Make your budget clear to your lawyer and manage your expectations.
Try to save on utilities – It is easy to become lazy when it comes to energy or internet bills, but periodically reviewing your contracts and comparing alternative options will save you from incurring any extra charges.
Consider renting instead of buying – Leasing equipment instead of buying helps you to avoid maintenance costs and can also prevent you from overpaying on equipment only needed for a specific period of time. You could also consider renting your office space, as it makes for easier expansion and relocation.
Keep an eye on your business credit score – Your score may be preventing you from getting top credit deals so it is worth checking what you can do to improve it. This includes never making late repayments. This can turn out more costly than you think.
Talk to us for further advice on personal and business finances and goals!