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Tips for Managing Business Finances


First of all, the most important things is that we, as the small company owner have to take care of our small business financing. Huge amount of money is thrown every year by businesses just because they are not running their financing efficiently. This is also the area of business where entrepreneurs struggle most since we cannot work without money-cash flow is the lifeblood of the business. Small mistakes and lack of knowledge can be sources of serious problems and costs. However, we don’t need to be professional economist to know how to avoid them. Here are some advices which will help us to establish a healthy relationship with our business finances.

 

At the beginning we should consider the professional assistance we need. If we need money to start our business, you must get a loan. Many banks provide small business loans; the most important part is our business plan and a clear idea of in which direction our company is going to develop. Besides, we will probably need a trusted bookkeeper who can help you deal with all of the mundane tasks on regular basis (and save you a lot of money and stress). But be sure to understand the various types of bookkeepers and how to avoid fraud. The first thing we will need to do for our business is to establish a sound financial budget. Open a special bank account for your business only. Try to keep our business transactions and household accounts completely separate. Do not borrow from one to another, no matter how tough the going gets. One of the biggest mistakes is to mix business with household finances. It is very important that we keep our bank account under control. We may have a bank consultant and a bookkeeper, but we must have some kind of our own tracking the quotes and work in progress as well as sales invoices. Our bank balance should agree with our book keeping. Do not give credit terms. Our income depends on our agreement and sales skills. We must ensure that clients know that payment is required on completion; of course it’s much better if we can get part or full payment up front. We must discuss, write down and agree terms of trade, supported by the contract which will protect us. Keep under control when invoices are due to be paid. This is the only way to have our invoices as frequently as possible, and not to lose our own money. As in all categories of life and business for finances is the crucial to know our targets. For example, if we need to advertise due to not having a shop front, we should consider very carefully where we advertise and how much money it costs to reach each one of our prospects. Marketing and attracting customers can be very interesting and many business owners get lost in all that, spending much more money than they have planed. At the beginning, but also once and while, set sales targets and monitor them, comparing actual results with projections regularly.

 

Last but not the least ,we should not forget that each fresh started business rarely shows any profit within the first 3 months, sometimes even much longer. This is the fact we should keep in mind while planning our monthly budget. Be realistic-do not overspend but don’t you either starve our business-since we mustn’t let our business run out of money. Start small and work our way up.


About the Author

parveen kumar

First of all, the most important things is that we, as the small company owner have to take care of our small business financing. Huge amount of money is thrown every year by businesses just because they are not running their financing efficiently.