Healthy finances result for a healthy business and during the current economic climate, business owners need to keep a close watch on their finances to keep their heads above water. Here are some tips for new and small established businesses:
- Be aware of your gross profit which is the profit you make from selling your products. It is not unusual for businesses to sell their products for less than they cost to produce because they don’t know their real cost.
- Manage your cash well. As the saying goes- ‘Turnover is vanity, profit is sanity, but cash is king.’ Without cash, our business will not succeed. There’s a lot of truth in that saying.
- Set a budget. Spend a couple of hours noting down your forecast for the next year. Every three to six months, make sure to review the forecast and adjust it wherever necessary.
- Always spend as little money as possible, particularly in the early days. For instance, if you can, work from your home instead of renting an office.
- Always make sure to file your tax returns in a timely manner as well as paying your tax bill by the due date. Never disregard them and never except them to overlook you.
- Be organized and keep precise and up-to-date accounting records. Use accounting software to help you because software will help you organize management information that is crucial in helping you manage your business more efficiently. Neat, tidy records will make it much easier for your accountant.
- Whatever tasks that take up your time or you don’t understand, you can outsource it. It’s a false mindset to think it’s cheaper for you to do it yourself.
- There’s nothing that gives a stronger negative impression than not having an office number, particularly if you’re offering professional services. A mobile number will not be enough as your only contact number. There are plenty of low cost options available to pay for a fixed line.
- Understand that hiring someone new is more expensive than retaining a current employee. Happy employees automatically translate to happy customers.
- And finally, you may be a small start up business, but you need to act like a successful one. All the big names didn’t become successful by failing to plan, failing to manage cash or failing to deliver exactly what their customers wanted.
