No company can afford to waste money, but if you have a small business, you know that every penny counts. Many small businesses operate on razor-thin margins, and smart money management can mean the difference between success and failure, especially in the early years. The suggestions below can help you better manage your money within your business and increase the likelihood of your company’s longevity.
Consider Business Loans
Taking advantage of Accion Opportunity Fund business loans can be an excellent way to get some money for your business. Whether you’re dealing with a cash flow issue, you need some financing for expansion or you have other needs, small business loans give you the opportunity to take your company to the next level with a reasonable repayment plan, including a manageable interest rate.
Know Your Own Needs
When it comes to your business, do you pay yourself first or do you put the money back into the company? If you’ve got savings put away or you’ve kept your day job, the answer is probably the latter, but if neither of these are true and you don’t have any other source of financial support, such as a spouse, then you need to make sure you pay yourself adequately. You might need to create a personal budget and spend a few months tracking your spending to get an idea of the bare minimum you need to cover your expenses. At the same time, keep in mind that this frugal approach should only be temporary. Eventually, your company is going to need to start paying for itself and provide you with a living wage. If it doesn’t, it’s a hobby, which is fine, but you should not confuse that with a successful business.
Track Your Spending
One of the basic elements of an effective accounting system is understanding where all your dollars and cents are being spent. If you do all your own books, you are probably already on top of your spending, but if you have a bookkeeper or an accountant, make sure that you don’t use this an excuse to be hands-off when it comes to finances. As a small business owner, you should know what’s happening daily as far as what’s going in and coming out. This can provide a great deal of insight into whether you are wasting money and where you can improve.
Know Your Risks
Understanding the risks that your company faces can help you put your finances in better order to prepare for those risks. What those risks are will vary based on such factors as what industry you are in, where you live and whether you have employees. If you operate in an area where earthquakes, hurricanes or forest fires are common, what kind of a threat does this pose? If you have employees, will a mandated rise in minimum wage affect you? Are there compliance issues specific to your industry that you need to be aware of? What happens if profits slow down? Identifying your baseline of profits and expenses for each month can help you better prepare for these risks by giving you an idea of what kind of liquidity you have access to in case of emergency and whether you need to increase that liquidity.