Small Business Money Management: 5 Tips to Get Ahead
Small business success is about far more than having a good idea and some leadership skills. Running your own business, at least early on, also requires that you have a head for sound money management. After all, resources are scarce but needs are many, which means it’s important not only to save every dollar possible, but make sure every buck you do spend is put to maximum use.
You might think you’re doing just fine in this department, but when it comes to money and your small business, there’s always room for improvement. So, the following are some small business money management tips you can implement to keep more cash in your company’s bank account.
5 Small Business Money Management Tips
1. Create a Budget: You’ll find this on almost any list of money management to-do items, and for good reason: A budget is quite literally the most important building block of your small business’ finances. Even the most basic of budgets will provide you with a yearlong blueprint of how much you expect to bring in, what you’ll spend it on and what potentially will be left over to either save for a rainy day or expand your business. If you’re not sure how to get started, check out our tips on creating a budget.
2. Prioritize Saving: Entrepreneurs tend to lionize the likes of Google and Apple – and part and parcel of that is their employee-friendly cultures. High-grade cafeterias, game rooms and aesthetically pleasing corporate headquarters are a hallmark of these and other Silicon Valley companies, and most up-and-coming businesses typically feel a little pressure to mimic these giants to try to bring in talent. While it makes sense to offer a perk or two, remember that most companies start from humble beginnings – what matters now is spending money on building the business, saving what you can and becoming soundly profitable. Once you have cash to spare, then you can hire your office sushi chef.
3. Paper, Not Plastic: A corporate credit card is useful for a few things, such as office supplies or an emergency purchase. But you want to keep your plastic use to a minimum to avoid the high interest rates that come in tandem. Specifically, don’t make a habit of paying the monthly bills – rent, electric, internet, etc. – with your credit card. If you’re suddenly strapped for cash and can only make minimum payments, you’ll find yourself trapped in a situation where you’re paying interest to the bank instead of paying yourself.
4. Don’t Keep Long-Standing Tabs: You’re running a business, not a bar, so it’s important that when payment is due, you collect. Make sure your repayment and invoicing terms are crystal clear to clients, customers and vendors. More importantly: When you set terms in place, enforce them. Make sure any offending party is informed immediately, and don’t be shy about reminding them until you’re paid. Again, not only is every dollar you collect is vital to the life of your business, but getting paid when you expect to get paid helps you better stick to your budget.
5. “Ping” a Pro: Eventually, you might want to bring a chief financial officer, or CFO, on board. A CFO’s job is to literally watch every dollar you spend, so having someone whose job it is to manage the money makes plenty of sense – once you can actually afford a full-time position dedicated to that task. However, early on, it may be difficult to justify that kind of expense, but that’s OK – professional help is still at your fingertips. McManamon & Co. is a full-service accounting firm that offers a wide array of options for small- and midsize businesses, including accounting services, such as creating financial statements and training staff, but also broader consulting services for things such as strategic planning activities and tax strategies.
Make the most of your money … to make more money. Reach out to McManamon & Co. by contacting us online or calling 440.892.9088.
Tags: McManamon, small business, small business money management | Posted in accounting, McManamon & Co., small business