Five Tips to Help You Better Manage your Finances
Do you know if your business made a profit last month? Are there monthly costs you could cut? Are there certain times of the year where business is better than others? If you don’t know the answers to these questions, you’re not alone. However, knowing the answers can mean the difference between survival and failure for your business – sounds dramatic, but it’s true. Read on for five tips to help you take control and keep your business flourishing.
Tip #1: Learn all you can.
It’s important to learn as much as you can about your finances so you’ll be able to make informed financial decisions. Take the time to understand how to prepare and read financial reports or statements, such as a cash flow statement, income statement, and balance sheet. To learn more about how to read and use different financial statements, click here. Financial statements are especially valuable because they can help track your business’s growth trajectory and spending habits, strategize and plan for the future, as well as demonstrate your business’s viability to lenders and investors.
Building or growing a small business is a constantly evolving journey. As a business owner, you need to keep track of your business’s goals, industry trends and product markets, and be aware of financing options, among other things. To learn more about how to build a strong business plan that can help keep your business on the path to prosperity, click here.
Tip #2: Forecast expenses.
One critical element of managing your finances is to determine your costs. On one hand, fixed costs include things like rent, utilities and other costs that stay the same each month. On the other hand, variable costs are different every month – or may even be unexpected. For example, you may have to pay your annual insurance premium or upgrade your equipment. To be successful, you must plan for both types of expenses.
Tip #3: Stick to a strict budget.
Once you know your expenses, you can create a budget to keep your business on track. Revisit your budget each month to see where you can improve your bottom line – either by finding new ways to earn money, or by cutting expenses where possible – or both. Whatever the case may be, sticking to a strong budget will help you make better financial decisions.
Tip #4: Keep things automated.
Whether you’re investing money, paying bills, sending out invoices or accepting payments, the more you can automate your finances, the better. And, if you use web-based software, you can see where you stand in real-time, every day.
Tip #5: Hire a trusted accountant.
It’s a good idea to hire a professional accountant to help you stay on track – just make sure it’s someone you trust. Plus, your accountant will help with tax planning, which can be quite complex.
While this is not an exhaustive list, these tips will help get your business heading in the right direction. To learn more about managing your business, click here to check out Huntington Bank’s free educational modules.