7 Tips On How To Manage The Finances Of Your Small Business

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Finance makes the blood flow of every business. When there is no money to run your business be very sure that the business would fold up in no time.

When there is no finance in your business there is a certain height that it wont get to.

You could have finance for your business but when you lack the ability to manage the finance then you are looking at a closed business.

Managing the finance of your business is very important, it is as having the finances for the business.

Today we would be discussing on 7 ways on how to manage the finances of your small business.

  1. Business money and personal money do not have any business being together: By all means separate your business money from your personal money, make sure to avoid using your business money for personal needs.

It crashes a business down faster than you can know. Also in rare cases avoid using personal money into business without keeping records, the business wont grow if you indulge in these practices.

Make sure to always separate the individual finances so that you would be able to keep account of the finance of the business.

  1. Record keeping and Book keeping are very essential: From way back in the 1700’s they have a system with which they keep records of their transactions, even with the fact that they don’t have technology as we have now and also majority were illiterates but they still have a way to keep track of what they transacted!

Now with technology and also education as a business owner, improper record keeping and book keeping are in excusable.

This where you would check for yearly audit, for referral to a past price or cost etc. the importance of record and book keeping cannot be over emphasize for small business owners.

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There are lots of free YouTube videos to learn the skills, you can employ a company that handles such services or go with the old fashioned book and biro to keep your records and books of your business. In all make sure you do this very Important activity for your business.

  1. Make a good investment growth plan: As a small business owner, you should aspire big things and growth for your business. This would afford you the opportunity to spot opportunities for good investments that would have good returns that would be beneficial and healthy for your business.

When such investments are made with your business in mind, the returns put back into your business which increases the finance of the business, keep the business running with no loose ends.

  1. Have a good budget system: Budgeting is allocating finance for each project at a particular point in time.

A good budget system is very essential for your business, it makes you aware of what you are using your finances for at every particular time, it also helps you keep track of what you are using the finances of the business for and what should be done each month.

It helps keep the business in perspectives of goals set for a period of time and help avoid squandering of finances.

  1. Inventory management should be improved: Like 15 years ago stock cards were still very much in use, companies use it to keep track of their business but in this present time companies make use of excel spread sheet and some other technical tools for their inventories.

Many small businesses do not take inventory management serious. They feel because their business is not that big so there is no need to keep inventory.

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This brings the business down as you won’t be aware of what is leaving the business and what remains. Inventory management helps keep adequate records.

  1. Loans are very helpful tools for every business: Every small business needs support, to grow and try new things that would be beneficial for the business. Loans are tools that would assist the business to grow, it keeps the business moving.

Most business are afraid having loan structure, this should not be as loans are important to the growth of the business.

Learn to embrace loans as part of the growth of your business as this would help improve the finances of your business. It would help the business to achieve their set plans and the goals kept aside.

  1. Ensure that tax money is kept separately: This is very important and also where budgeting comes into play. Keep aside like 30% of your income for tax.

The government doesn’t show mercy on tax defaulters and it would cripple your business if you just dip your hands into your capital when its time to pay for your tax.

Ensure to pay your tax as required and more importantly separate the money monthly to ensure it being easy when you need it to pay.

These are steps on how to manage the finances of your small business, when you manage your finances adequately and use the necessary tools, your business growth is inevitable.

 

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