Often new entrepreneurs do not give sufficient attention to financial management. If this mistake is not rectified on time then it can cause huge damage to your business. Often the resource which small enterprises lack is money. Don’t let this vital resource go to waste, and make sure that cash flow is steady.
Every penny has to be counted for running your business well. You also have to be ready for financial challenges that changes in the market may pose. To help you come out through the maze of financial management some helpful tips have been discussed in the following paragraphs.
Learn the basics of accounting
Alone you cannot manage all the different aspects of your business and you will hire professional accountants and bookkeepers. Still it is better to learn accounting because the financial aspect of your business always affects the other aspects like marketing, business expansion and production. If the professionals you hire try to cheat you or make any mistakes you will be able to catch them early.
Always check the accounts on your own and keep limited sums due with your suppliers. Also ask for up front payments from the customers. Every day manage the accounts book at the end of the day. There are several high quality costing and accounts management software which you can use for your benefit.
Don’t mix business with pleasure
Every penny your business spends should be accounted for. Do not randomly use business funds for personal expenses. This is an ethically wrong practice. Entrepreneurs who use business funds for personal travels not only lose the trust of investors but also the scope to grow.
You can pay for business trips but if you want to take your spouse and kids along, then pay for them out of your pocket. This way you will be able to account for every penny invested in developing your business.
Cost effective invoicing system
Electronic invoicing is the cost effective alternative that you must try instead of the printed invoicing. Traditional invoicing costs more and managing so many papers can become a great difficulty. You can track the billing experience and satisfaction of customers and also get feedback through mails. It is also possible to check if the customer has opened your invoice mails and checked it or not.
You have a family emergency fund in all probabilities. Make one such fund for your business as well. You never know when there will be a financial crunch or you will need extra money for a necessity. Keep sufficient money in your emergency business fund. Good entrepreneurs also save for rainy-days so that they can pull their business up and lead it forward.
Learn to negotiate with vendors
There are vendors who give products on credit and collect payment after a period of 30 days. You can try to negotiate prices with vendors and try to get a grace period from them. Be honest and diplomatic at the same time. If you agree to all their terms then they will never give you any benefits of bargaining on their own.
Do not hire too many staffs
Small businesses should hire employees who are active and ready to multitask. Your manager and you can make coffee in turns or take back pending work home. Working in startups has its own set of benefits. In the beginning one may have to shoulder more responsibilities than the job description describes but later on they can even get a share in the company or a big promotion. Hire efficient employees but keep the number of workers to a minimum.
There are many ways of cutting the costs and managing the finances of a small enterprise. Use financial resources carefully and keep tab of all the expenses to reduce costs.