Startups and small businesses face many different challenges, but the one that typically tops the list is money management. While there is always room for long term financial improvements to be made in the operations side of business, there also things that you can do in the day-to-day management of your business that can help the finances too.
Here are 3 tips to better your financial management, no matter the size of your business.
1. Don’t mix your personal and business finances
Your mortgage, grocery shopping, and Amazon account should all be connected to your personal accounts. Your expenditure and income from your business, should all be associated with your business account. Keeping your personal and business finances separate is important, and while setting up separate bank accounts and credit cards require some effort, you will be thankful that you did in the long run.
- It doesn’t look professional
Just because your business is young, does not mean that it shouldn’t adopt a professional image from the offset. Everything that is a representation of your business needs to support and promote the brand, and this even applies to your payment methods. If you are using personal checks or even making a BACS payment from your personal account, it looks unprofessional to those that you are dealing with.
- Tax implications
As a business
The IRS will look at any deductions and losses that you make and deny them. This means that you risk paying more to the IRS that you need to. By keeping separate accounts, you not only save time when it comes to calculating your tax, but it ensures that you are more likely to make all the claims that your business qualifies for.
- How to keep things separate
Keep your two lives separate. Have a business credit card that is only used for business purposes such as buying office supplies. Also, have a personal credit card which you can use for your hobbies and everyday living. For instance, if you download a fixed odds betting app, this should be linked to your personal cards.
2. Always negotiate
Just because you have been quoted a price by suppliers does not mean that it is their best offer. While the internet is a fabulous tool for business, it has meant that people often fail to pick the phone up and speak to people to negotiate a better price. Don’t just rely on email correspondence to ensure that you get a good deal; build and develop the relationship you have with suppliers to get a better price.
3. Be finance alert
Every business decision that you make should be made with your revenue and profit margin in mind. You need to have a deep understanding of your business’s financial position to make informed decisions.
Whether you are negotiating with suppliers, providing a quote for a customer, the business’s finances will inform your decision, but use this awareness to influence the less obvious aspects of business and develop a culture that minimizes expenditure.
Keep an eye out for mail-in rebate offers on office equipment, by second-hand equipment and regularly review providers the internet, cell phones, and utilities.
Financial management and administration aspect of a new business venture is not exciting, it’s not glamorous, and it doesn’t make you money; however, if you get it right now, it can save you a great deal of money and time in the long run.