Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. A major part of your business is budgeting and controlling costs. Doing so will ensure your business’s success. The following contributed post is entitled, Min-Maxing Your Finances.
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When it comes to looking after your business, you need to be very clear about what is going in and what is coming out. Where your money is stashed, and how you can make the most of it.
Photo by Sharon McCutcheon on Unsplash
It is harder in the early days to truly see what is coming your way. But, that is why you need to really lay that business plan down and make sure your cash flow forecast is as tight as possible.
Here are some extra tips to help you make the most of your money when it really matters.
Accounting
It would do you well to hire a bookkeeper and accountant. You can, of course, get yourself some really good accounting software and so it yourself but that will only help you out for so long. You can weigh up the costs in advance and make your mind up based on the money that you have available at the moment.
Costs
No matter what it is, if you can get it cheaper – for the same quality, then do it. For example, if you know that you need a medical refrigerator, carpeting in your office, a new computer – anything. Do your research and make sure that you are going to get the cheapest that you can get. And whenever possible, you are going to need to haggle on the extras. More extended warranty, free delivery, and installation – always push for more.
Projections
Having very clear financial projections will be you are keeping a closer eye on where your money is and where it should be. It will have you anticipate where your significant costs are going to be leaving your accounts and to make sure you have a buffer for them,
Invoicing
It is so tempting to let invoicing slide. A friend of a friend purchased 6 of something, but can only pay for 2 and will give you the rest of the cash later on. You can’t run a business on a hope and a maybe. Here are some tips for your invoicing –
● Send out invoices as soon as possible
● Have a definite date that the money is due by
● Include your terms and conditions
● Have a late fee applicable after the payment date has passed
● Follow up after you send an invoice and mention you have submitted it – could they check it has been received?
● Keep your references in good order.
Business Banking
If you use your personal account for everything, it can get very messy, very quickly. It is better that you open a business bank account, so you can keep track of all of your business transactions. It is also better for you come tax time as everything can be added up very easily. You will also have a clearer idea of what your profit really is.
Pay
You should always pay yourself first. If you aren’t paying yourself first, and instead you are paying all the debts and services for your business, your profit is not your actual profit. You are supposed to be able to make a living from your company. Of course, you aren’t going to be taking a full wage in the early days, but enough to cover your personal expenses is going to be ideal.
Thrifty
There is a temptation that because you own a business, you can then act far too big for your boots. Renting expensive cars, hotel rooms, and very lovely meals – all to impress potential clients. But the fact is this will all still need to be paid for, and it is going to land on your shoulders. It is much smarter to take care of the pennies and cents at all times. Set your salary as low as you can, and you will find that the lean months pay off in the future.
Traveling
For some reason, so many freelancers and small business owners want to travel as much as they can. Which is great – the world is big and beautiful, but for those few thousand dollars on flights – you can have a skype call for free. Most of the time, it is not really cost-efficient or required to have a face to face meeting. So try and hold off on them for as long as possible.
Marketing
For as long as you can manage it, do your own marketing. There will come a time that you are going to want to work with another company but in the meantime – you will learn so much about your company, clients and reach that you can remain relatively hands-on and involved. As well as having a really great set of marketing skills and experience.
Rent or Buy
If you don’t need to buy a giant piece of machinery or a building, then simply don’t. In the early days of business throwing, stacks of cash at long term commitments can backfire massively if anything happens. So leasing equipment can help you avoid maintenance costs, and depending on the item, you might get the opportunity to get a new one every 12 months – which is pretty sweet.
Loans
If you need a business loan, then take one. You will be able to see what your finances are doing long before it happens. And if you know that there will be some rough patches coming up, you’ll need to have some bounce. If you have space to use your own capital and savings, then try to do that too. The key is to know what is a sinking ship, and what is a small blip.
Eyes wide open
When it comes to money, far too many people try to duck the situation and refuse to deal with cash when they have the opportunity – which is sad really, because many a small business could have been saved if people paid attention to the small change as much as they do the big numbers. Minimize your expenses and maximize your income by making smart decisions.
