Every small business owner faces financial challenges, whether their business is brand new or has been in operation for decades.
Financial challenges may be common, but that doesn’t make them any less stressful.
If you’re currently having a hard time staying on top of your business’s finances, it’s important to re-evaluate your strategy and consider changing your approach.
Not sure where to begin?
Read on to learn some essential finance tips for anyone who’s running a small business.
1. Evaluate Your Budget Often
As a business owner, you need to make sure you’re evaluating your budget on a regular basis.
Go over the numbers at least once per week to figure out how you’re doing, what your weak spots are, and what you can do to refine and make improvements.
If you get in the habit of reviewing the numbers once per week, you’ll feel less daunted when the time comes.
2. Have Experts on Your Side
It’s okay if you’re not a financial expert. That doesn’t give you a free pass to slack on your financial management responsibilities, though.
If you’re having a hard time keeping up with your business finances and business banking needs, hire a team of professionals who can help.
At the very least, every business owner should have an accountant, a financial advisor, and an attorney as part of their team.
3. Ensure Adequate Cash Flow
A lack of cash flow is one of the most common reasons why small businesses do not survive.
Make sure you have adequate cash on hand to keep your business running and resist the urge to reinvest all your revenue right back into the business. You need to have reserves at the ready — remember, the small business world can be very unpredictable.
4. Be Frugal
It’s important to make sure you have adequate cash on hand. It’s also important to be frugal with that cash, especially when you’re just getting started.
Keep your salary as low as possible and only offer government-mandated benefits. Over time, you can loosen up when your profits increase.
5. Keep Travel Costs Low
Speaking of frugality, be sure to keep your travel costs as low as possible. Fly coach and resist the urge to book stays at luxurious hotels. Keep things simple and remember there’s very little return that comes from investing in lavish travel accommodations.
6. Apply for Loans Early
Don’t wait until your business is already in financial trouble to apply for loans. If a lender sees that you have inadequate cash flow or are having a hard time paying your bills, they’re going to be very unlikely to approve your application.
7. Separate Business and Personal Finances
If you haven’t already done this, do it now. Open a separate business bank account and keep the business’s revenue separate from your own personal finances. This will save you a lot of stress and make money management much easier.
8. Set Short- and Long-Term Goals
Goal-setting is essential for businesses that want to grow and thrive for years to come. Make sure you’re sitting down with your team on a regular basis to set short- and long-term financial goals. This will keep you motivated, especially during times when business is slow.
9. Protect Your Business from Fraud
Cybersecurity issues and data breaches could lead to a lot of expensive bills for your business. To avoid these problems and the costs that come with them, make sure you’re updating your software on a regular basis and making use of anti-virus tracking.
10. Plan Ahead for Big Expenses
If you know you’re going to need to make a big purchase in the future, start planning for it now.
Open a dedicated savings account and invest a portion of your revenue in it each month. With this approach, it may take a little longer to make that big purchase, but you’ll be able to rest easy when you do make it.
11. Protect Your Personal Assets
Be sure to protect your personal assets by registering your business as an LLC, or limited liability company.
When you’ve registered your business as an LLC, you’ll be protected in the event that your business is sued. Should that happen, only your business assets will have the potential to be seized; your personal assets will be safe.
12. Rent Instead of Buying
Reconsider purchasing equipment and think about renting it instead. There are a lot of benefits that come with renting equipment, including a lower price tag.
Renting is an especially good option when it comes to equipment that you will not use on a regular basis. When you rent equipment, you’re also shielded from market fluctuations and don’t have to deal with any annoying depreciation costs.
13. Be Proactive About Invoicing
Many business owners have a tendency to put off invoicing. It’s an irritating task, but it needs to be done. Remember, the more you put it off, the more challenging it’ll be.
Send invoices out as soon as possible and set a payment term of seven days to stay on top of everything and make sure nothing slips through the cracks.
14. Plan for the Off-Season
Finally, make sure you have an emergency fund in place to help you get through the off-season or stay afloat during any dry spells. No matter how confident you are in your business, it’s always best to have a safety net.
Need More Help Running a Small Business?
As you can see, there’s a lot to keep in mind when you’re running a small business, especially as far as finances are concerned.
It’s easy to feel overwhelmed when you first get started. Keep these tips in mind, though, and you’ll have an easier time staying on top of your finances and making sure your business is in good shape.
Do you need more help with your business’s finances? If so, we’re here to help at Signature Bank of Georgia.
We offer a wide range of business banking tools, including online banking, commercial and SBA loans, and cash management services.
Contact us today to learn more or to start working with us!