Chalana Williams, First Federal of Lakewood
Hanging onto your money and handling it competently could be a challenge. Especially for a small business owner, it can be the make or break factor for being able to stay in business, let alone turning a profit and growing. Even if you have an accountant, you still need to know how to handle the financial basics of your business, including bookkeeping and budgeting. Competence in money management sets your business up for growth.
Master money management in your business with these tips:
Use a business bank account.
Whatever the size of your business you need to open a business bank account. Run all money that is business related through this account. Keeping everything separate is essential to create an accurate picture for tax purposes.
Use an accounting system.
Set up your accounting books right away and learn the basics of how your accounting software operates, keep on top of what money is coming in and going out, and don’t get behind on logging transactions.
Set up a payment system.
You need an effective way to accept money for your product or service. This can be as simple as using Paypal, or more complex using a shopping cart and merchant account. The more payment options you give customers, the easier it will be to collect what is due.
Learn how to estimate a job.
Estimates should be as accurate as possible. Understand what your overhead is, how many hours a job will take you, and the minimum you need to quote to make a profit.
Keep your overhead to a minimum.
Hire staff only when you can afford it and need them. When you are starting out, only spend just what you need to make clients comfortable and look into lower cost options for office space and décor.
Make a budget and stick to it.
Budgets help you decide how much to spend in each area and how much to earmark for growth. Base the budget on expenses from previous years, how the market is doing, how much your suppliers are charging, and your overhead. Be sure to include money for emergencies and to fund future growth.
Taking a proactive stance toward handling money radically reduces the risk that you will be caught unawares by a big expense. It will let you keep adequate cash flowing through your business, letting your business prosper and grow.
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