More and more women are setting up businesses. It’s no secret that failure rates for start-ups are high but there are ways to shorten the odds of achieving success. One critical commandment is to keep a firm grip on your business finances. In this guide, we’ll discuss effective tips to manage your money.
Separate personal and business finances
It may be tempting when you launch a small business to combine personal and business banking but the sooner you separate your finances the better. Managing business accounts is very different from personal banking. You’ll need to factor in running costs, wages, outsourcing fees, supplies and taxes, as well as monitoring your income and processing invoices. It’s wise to set up a business bank account at the outset and to use corporate cards rather than personal debit or credit cards to make payments. It’s also beneficial to record any payments you make from your own accounts for business purposes so that you have an accurate idea of profit and loss figures and you can keep track of transactions.
Budgeting and limiting spending
Budgeting is essential for all business owners. Drawing up a budget enables you to track and monitor spending, keep an eye on your income and audit expenses. Once you know how much money is coming into and going out of your accounts, you can establish spending limits, set aside funds for growth or further investment, or clear debts. It’s also an excellent idea to use your budget to highlight areas where you may be overspending and to identify potential reductions or cuts.
Negotiating on prices
Negotiation skills are incredibly valuable for business owners. If you buy materials or products from suppliers, you work with distributors or logistics firms, or you outsource services to external agencies or companies, for example, make sure you get the best deal.
Utilizing tools and resources
Managing your finances can be difficult enough without taking charge of company accounts. It is advantageous to think about hiring an accountant or outsourcing accounting and bookkeeping but if you don’t want to increase your expenses, there are some excellent tools and resources available. You can use apps and software programs to process and log invoices, help with payroll and wages, help you to comply with ASC 842 guidelines, and any other guidelines that you need to adhere to, and facilitate easy budgeting and forecasting.
Flexible staffing solutions
For many business owners, staff wages are a significant outgoing. Even if you only have a small team, you may find that salaries eat into your profits. If you’re keen to lower your wage bill without compromising on quality or service, there may be solutions. You could consider offering short-term contracts or hiring people on a part-time basis, you could recruit seasonal staff during peak periods or you could opt to outsource rather than to employ new members of staff.
Cash flow issues and mounting debts are common causes of business failure. If you run a company, or you’re preparing to launch a new venture, it’s vital to manage your money effectively from the start. Separate business and personal accounts, make use of tools and resources, consider flexible staffing options and draw up and stick to a budget.Follow Womenlines on Social Media