One very common area for new business owners to fall short is managing finances. Accounting is often a task handed over to someone who isn’t entirely qualified, especially in the early stages of a business.
While this practice might get you by in the early stages, it’s best to get some sort of accounting service or high-quality software as soon as you can.
If getting your own accountant or accounting service is out of the question, you’re not completely out of luck. Here are a few ways you can make sure you stay on top of your small business finances.
Keep Records Tight from the Start
Keep absolutely spotless records. Record everything and keep your data clean and organized.
There are several ways practicing top-tier bookkeeping pays for itself. First, you can’t expect to catch a problem if you aren’t already keeping your records straight. If you’re reviewing your data regularly (more on that later) you can catch potential catastrophes before they happen. If one of your expenses is starting to grow, that’s easier to notice and respond to when your books are in order.
Another benefit is when it comes time for investors. Potential investors probably aren’t going to get on board with a company that has poorly kept, mismanaged financial records. On the flipside, immaculate records that are easy to read can impress investors.
Keep Personal and Business Separate
This could be taken several different ways, but we want to focus on just a couple for this article.
As soon as you can, get a separate business bank account. This makes keeping good-looking records a lot easier if transactions are separated from the beginning. Sifting through online bank statements to find business-related expenses is a waste of time. Get these things on their own card and get the activity recorded easily and correctly.
Personal Loans to Business
Another common practice for new business owners and especially new entrepreneurs is to loan some cash to your business from your personal bank account. The reasons for this could be all kinds of things from getting some more product for a good deal or expanding a marketing campaign. Whatever it is, make sure these loans are recorded and paid back as soon as possible.
Stay-On-Top of Invoices
Unless you grew up dreaming of being an accountant or keeping books, invoicing can be a chore. But, it has to be done. Instead of putting off all of your invoicing, get them sent out as soon as you’ve provided your service or delivered your product.
Set a payment term right from the get-go. This insures you don’t have payments just floating in the ether. Another great practice is to match up invoices with payment records for future cross-reference.
Especially in the beginning, wherever you can, keep the costs under control.
If you feel the need for expansion or something else that will cause additional expense, be absolutely sure you can do it. This is just one area where your religious record-keeping will help you out a lot.
Make Projections and Review Regularly
It probably feels like we’ve mentioned “recording” things around fifty times. If you follow that advice, you’ll end up with all kinds of great to data to go through.
Use all of this data to project where your income and expenses should be as time goes on. Alongside this, be sure to regularly review your books to make sure everything is staying in good order.