There are some things that all small businesses will have in common, and many will fall into the same financial traps whether they are a boutique clothing store or a landscaping company. Here are ten simple finance tips that will work for any small-business owner.
1. Set up a business bank account
It’s a good idea to have a clear picture of your business income and expenses from the outset. Having a dedicated business bank account will help to keep your business and personal finances separate, and make bookkeeping and accounting duties far simpler.
2. Set up a bookkeeping system
Once your business is up and running, you’ll want to have a clear idea of its performance so that you can continue to make sound business decisions for its growth. You will also have tax and superannuation obligations to meet and may wish to demonstrate your financial position in order to secure business loans.
You will find a variety of manual and electronic bookkeeping systems to choose from.
3. Find the right advisor
Finding the right accountant or business advisor can help you set up your business for long term success and profitability. Working with a financial professional will help you to get your bookkeeping and budgeting systems off to a healthy start.
4. Create a budget
Outlining your expected income and expenses should give you greater control when managing your business cashflow. It will help you to allocate funds, manage your business loans, and keep you on track towards your business goals.
5. Decide on payment types and invoice terms
When you’re ready to start charging for your goods and services, you will need to have clear payment terms, and you will want to have made decisions regarding the payment types your customers can use, including alternative methods like buy now, pay later. You may also need to set up an invoicing system with clear due dates and payment methods.
6. Manage cashflow
Many small businesses will experience cycles or seasonal trends that impact their cashflow. Creating a cashflow statement can help you to plan ahead and ensure you always have adequate cashflow for business operations.
7. Have a backup funding plan
Budgeting and planning ahead can reduce the risk of your business suffering from inadequate cashflow. However, things can still happen unexpectedly.
Think about having some money set aside in the business in case your income dries up for a period. You will be much better equipped to weather the storm with a little backup funding.
8. Invest in your business
One of the most important things you can do for your business finances is to ensure you have revenue coming in. Think about the things you need to do to grow your business and your profits. This can include applying for small-business loans and investing in marketing, equipment, and other essentials that will help your business to thrive.
9. Focus on retaining customers
By turning customers into repeat customers, you don’t have to go through the process of attracting a new customer for every single sale. Find out how to better market to and serve your existing customers and you can gain the rewards of valuable repeat business.
10. Think about where you spend your time
Time is money, and you only have a finite amount. In order to work on your business, not just in your business, you need to know your strengths.
It might not be something you can achieve right away, but you should work towards the goal of having a business that you, the owner, can step away from. If you have the right people and processes in place, then your business can keep running, even when you’re not there.
If you’re implementing some of these tips, such as setting up a bookkeeping system, creating a budget, or managing your cashflow, then a Zip Business Trade account could help. It’s a safe, simple line of credit that allows you to pay invoices, enjoy greater cashflow control, and see all expenses in a clear monthly statement.