The day to day running of a business relies on you and perhaps a core team of staff to make sure everything moves as smoothly as possible, from admin tasks, through to big money decisions.
The big money decisions rely on a great deal of acumen and knowledge to push through, and sometimes whilst looking at the bigger picture, the smaller details such as day to day finances are often pushed to one side and forgotten about.
Managing these is something that requires thought and planning, but once the groundwork is done and preparations put in place it can mean the difference between failure and success long term, coupled with a drastic reduction in stress levels.
Here, we’re going to examine fourteen simple ways to avoid financial stresses when running a business that will help you, and your health!
Get into good habits straight away by either hiring a reputable bookkeeper, and/or accountant or going it alone and purchasing some decent quality accounting software so you can keep track of your accounts on your own terms.
Making sure that you know where every last bit of money has come from/gone to is essential for keeping your head above water and knowing your incomings and outgoings as intimately as possible.
Every so often go back through your accounts and all your receipts to make sure you’re aware of all your own expenses.
Keeping track of these regularly means that you can adjust where your money goes to and also, where it DOESN’T need to go. Doing this often can mean the difference between making savings or wasting money and show you where you need to make adjustments and cut backs.
Your main business plan should (hopefully) address where you see yourself heading over the coming months and years, and the same should be said of your finances.
Making sure you have a clear financial projection is very important, too. This can not only help you plan for the here and now, but also for any obstacles that might crop up in the future.
Once you’ve provided a service to someone, or sent them goods, invoice immediately. It’s good to make sure there are parameters in place, so set reasonable terms for people to pay you.
Working on the basis of seven days is sensible and always be sure to follow up on sent invoices, regularly.
There are easy ways to do this in your email program or within an SMS framework, so that you don’t even have to think about it or do the hard work yourself.
Keep on top of invoicing by using proper reference numbers and always cross reference these with any payments. Send out invoices as soon as possible after providing goods or services.
If you’re happy to have unexplained losses, or to have receipts and invoices mixed up, then go ahead and combine your business and personal money…
Most people would tell you this is a recipe for disaster, not least when it comes to doing your own taxes at the end of the year.
Keeping business and personal money separate also makes working out business profits much easier and will help you to keep on top of your expenses.
Have you loaned your own money to your business? Keep an accurate record of what you ploughed in and when.
Once you start to turn a profit (if you haven’t already) you can then quickly ascertain how much to pay yourself back, before working out how much tax to pay on any profits.
This doesn’t mean you cram all the profits from your business into your bank account and tell no-one, but it does mean that you’re entitled to take a little cut of the earnings.
This money can be set aside and saved for treats, or, indeed, for times when things aren’t so good, and you need a little extra cash flow to keep things going, or when you need to look after others. There’s nothing selfish about looking after yourself.
Yes, it’s good to take a little profit and have a treat, but that doesn’t mean you should throw caution to the wind.
Don’t get wired into the mentality of ‘running a business so I can afford this…that…the other’. Set your own salary at a reasonable level and only give you and any staff government-mandated benefits only.
Any savings you make can be given as bonuses or kept for when times are tough. Any businessperson will tell you that planning ahead with money means you’re always as secure as you can be for the future.
It’s inevitable for most business people that at some stage they’ll need a lawyer to help them manage their business affairs. However, managing costs for this can sometimes be tricky.
When you hire a lawyer to look after you, make your own expectations of what you expect, very clear. See if they will provide you with billing options that suit your business, such as hourly or if they’ll let you pay on a project by project basis.
Every businessperson has a dream to expand their empire and reach as many clients as possible, but slow and steady wins the race.
Business expansion needs sensible accounting in place and it needs to be done steadily and wisely.
Never invest huge wedges of cash into huge developments before you’re ready to do so. Business expansion should be steady and thorough rather than in a hurry. Biting off more than you can chew puts pressure on everyone in the company and is detrimental long term.
In our increasingly digital age, managing your own PR has never been easier and it’s a way to save money and also engage with people simply, and effectively.
Moreover, running and monitoring your own social media accounts is free, or can be done using cost effective payment plans which leave you free to engage in the day to day nitty gritty.
If you can, rent or lease equipment rather than investing in a huge outlay and buying everything outright from day one. It also means that you don’t have to be responsible for maintenance costs should things break down.
Rent an office space rather than own – down the line it makes moving in the event of company expansion a lot easier. Many people also choose to employ staff who work remotely too, which saves even more money in the long run. Virtual office spaces cost very little and are worth looking into if your budget is extremely tight.
We need to talk about capital. Start-ups often neglect this part of the process and find they haven’t enough to get them through the first tough months.
Make sure, if at all possible you have at least three months’ living expenses in a savings account.
On top of this have three months business expenses set up. It helps here to think negatively – plan as if you are expecting there to be no income or revenue from your business at all.
Yes, you need good PR and you need some initial forms of advertising, but it really doesn’t pay to spend too much on business cards, admin or lots of expensive marketing before any income has arrived into your bank account!
In the short term it can create a cash flow problem, which, if not tackled will snowball down the line.