Small business owners have a lot on their plate. Not only do they need to manage the day-to-day operations of their business, but they also need to stay on top of their finances. Here are ten tips to help you stay in the black and keep your small business running smoothly.
1. Keep Track of Your Expenses
This may seem like a no-brainer, but it’s essential to keep track of every single penny you spend. This includes both business and personal expenses. Having a clear picture of where your money is going will help you make more informed decisions about allocating your resources.
You can use a simple spreadsheet to track your expenses, or several apps and software programs can help you stay organized.
2. Know Your Numbers
To make smart financial decisions, you need to know your numbers inside and out. This means having a clear understanding of your income, expenses, profits, and losses.
If you’re not comfortable working with numbers, it might be worth hiring an accountant to help you get a handle on your finances. This will not only save you time, but it can also save you money in the long run.
3. Create a Budget and Stick to It
Once you have a clear understanding of your finances, you can start to create a budget. This will help you make sure that you’re spending within your means and not over-extending yourself.
There are a number of ways to create a budget. You can use a simple spreadsheet, an app, or software like Quicken or Mint.
4. Make Sure You’re Making a Profit
No matter how small your business is, you need to make sure you’re making a profit. This may seem like an obvious point, but it’s one that many small businesses overlook. If you’re not making a profit, then your business is simply not sustainable in the long run.
To make sure you’re making a profit, you need to track your revenue and expenses carefully. You also need to have a clear understanding of your pricing structure and make sure that your prices are competitive.
5. Keep Your Personal and Business Finances Separate
It’s important to keep your personal and business finances separate. This will help you stay organized and make it easier to track your expenses. It will also help you when it comes time to file your taxes.
You can open a separate bank account for your business or get a business credit card. This will help you keep your finances separate and make it easier to track your spending.
6. Keep Track of Business Loans and Lines of Credit
If you have a loan or line of credit for your business, it’s important to keep track of the payments. This will help you stay on top of your debt and avoid defaulting on your loan. You can use a loan tracker spreadsheet to keep track of your payments, or you can use an app like Mint.
Also, if you’re ever considering taking out a loan, there are merchant account loan options available that can give you the funds you need without putting your business in debt.
7. Stay on Top of Your Taxes
Paying your taxes may not be the most fun part of being a small business owner, but it’s important to stay on top of them. If you don’t pay your taxes, you could face serious penalties, including jail time.
With that said, don’t wait until the last minute to file your taxes. This will only add to the stress of tax season. Instead, start gathering your documents and information early so that you can be prepared.
8. Have a Contingency fund
No matter how well you plan, there will always be unexpected expenses. That’s why it’s important to have a contingency fund to cover your business costs in case of an emergency.
Ideally, you should have enough money in your contingency fund to cover at least three months of expenses. This will help you weather any storms that come your way and keep your business afloat.
9. Invest in Your Business
One of the best ways to ensure your small business is profitable is to invest in it. That means reinvesting some of your profits back into the business to help it grow. You can use that money to buy new equipment, hire new staff, or open a new location.
By investing in your business, you’re ensuring its future success. And that’s good for you, your employees, and your customers.
10. Get Professional Help When You Need It
There’s no shame in admitting that you need help, especially when it comes to your finances. If you’re having trouble managing your finances, consider hiring a professional accountant or financial advisor. They can help you get your business finances on track and make sure you’re making smart decisions with your money.
Managing your finances is an important part of running a small business. By following these tips, you can ensure that your business is profitable and sustainable in the long run.
