Starting your own business is a steep learning curve, and if you are going to survive, you need to learn a lot of new skills very quickly. Finance is the one area that people struggle with most because it’s entirely different to managing your personal finances. Here, we share some tips to help you keep on top of things, even when they feel like they are spiralling out of control.
Get Some Accounting Software
Even if you know the basics of accounting, keeping track of all of your spending and income is an enormous task. Fortunately, there are plenty of great pieces of cloud accounting software out there that make life a lot more straightforward. Organization is key when you’re managing your money, especially when it comes to doing taxes. You don’t want to spend hours searching for invoices that are saved all over the place on various computers and devices, so look for one that can keep all of this vital information together and keep track of your income and spending.
Cut Your Spending
The easiest way to lose control of finances is to spend more than is coming in. Eventually, cash reserves will run out, you’ll no longer be able to cover your overheads, and before you know it, your business has gone down the drain. The obvious solution is to bring in more revenue, but that won’t happen overnight. Cutting your spending is something that isn’t always easy, but essential if your cash reserve is running low. Wherever you look, you can reduce some expenses, even by a small amount. Look at all the programs and subscriptions you use – can any of them be abandoned? Are you paying for any equipment that no longer benefits your business? If so, get rid!
Separate Personal And Business Finances
It is vital to keep your personal money separate from your business money. Not doing this is a prevalent mistake that can lead to all sorts of errors happening in terms of cash flow and staying on top of things. Before you know it, you’re spending your businesses money on personal things and vice versa, and end up getting into a mess. It also makes bookkeeping and organising your tax return a lot more straightforward.
Chase Up Invoices
Unfortunately, many businesses have to spend a significant amount of time chasing up unpaid invoices. If you have made a lot of sales, but the money isn’t in your account, it’s more than likely down to customer not paying their invoices on time. While the majority of them will (hopefully!) pay on time, there are always some that will do anything that they can to avoid it. Keep on top of invoices by making the amount they owe and the date they need to be paid by clear and chase up as soon as they become overdue. Don’t be afraid of adding on late payment charges if appropriate.
By following these basic steps, you can learn to manage your finances properly and make sure that your business survives in the long term.