5 Important Financial Tips for Your Small Business

There are approximately 32 million small businesses just in the United States. They range from home-based internet businesses to brick-and-mortar restaurants. The ones with employees account for around 47 percent of all private-sector employees.

Despite their differences in industry and even the number of people they employ, almost all small businesses owners share a deep concern over their finances. Many small businesses operate on the thinnest of margins and often make payroll by the skin of their teeth.

Add the struggles of the last few years in and most business owners are looking for financial tips that can help ease even a little of the pressure. If that’s the boat you’re in, keep reading for five tips on managing finances that can help you out.

1. Build a Budget

Your business should operate on a clear budget the same way as your personal finances. Clear budgets help keep costs down and also force you to monitor where your business funds go on a weekly or monthly basis.

If you don’t use a budget, it’s a great way for you to identify problem areas where cost-cutting measures are appropriate. It’s also one of the most effective money management tools you can use.

2. Save Money

You should quite literally save some money in an emergency account for the business. It may seem all but impossible, but go back to that budget and give it a hard look.

You may only be able to put aside 1 or 2 percent of your profits, but even that will add up given time. Saving some money gives your business finances a cushion and helps alleviate some mental stress.

3. Reinvest

When you’re in the middle of a strong financial period, that’s the time to reinvest in your business. Get updated or new equipment. Boost your marketing spend.

These kinds of investments can streamline your processes and boost sales, which drives future success.

4. Look Outside Traditional Funding Sources

Most business owners look to the same traditional funding sources when financial rough patches do crop up. They look to things like:

  • Business credit lines
  • Bank loans
  • Credit Cards
  • Personal Savings

Before you dive into your personal savings, though, consider other options like an investor or SBA microloans.

5. Get Professional Financial Advice

Your business may not need long-term financial planning at this point, but every business benefits from professional financial advice. For example, use an accountant for your taxes. Use a professional bookkeeper to reconcile your books.

If nothing else, it spares you from muddling through tasks that many business owners don’t fully understand.

Leveraging Financial Tips

Leveraging these financial tips isn’t a call to do everything right now. Change takes time, so start with something immediate.

If you’re not solid on your books, get a bookkeeper. If you think business will slow down, focus on saving. If you have no idea where the money goes, create a budget.

Each thing you do will help you create a business that thrives over time.

Looking for more financial insights? Check out the Finance posts in our Business section.

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