Due to the dynamic nature of contemporary business, keeping your finances in order is more of a rocky road than a bed of roses.
The rule of thumb for every business is that they should never run out of cash. Therefore, all the business transactions you make need to have a clear purpose and a tangible financial backup.
Due to the dynamic nature of contemporary business, keeping your finances in order is more of a rocky road than a bed of roses. In this article I have prepared a set of crucial nuts and bolts that will help business owners run their ventures as successfully as possible and stay financially afloat and strive in the market place.
From one point of view, it’s better for an inexperienced entrepreneur not to succeed to fast. If you have to struggle to make ends meet for some time, you’ll learn to appreciate both your work and your earnings. However, if you’re unlucky/lucky – depending on the perspective –to achieve your goals quickly, you need to bring clear austerity measures to keep your budget under control.
Among other strictness measures, allow for only essential purchases – only essential business items should be bought.
Also depending on business size, you should limit recruitment and payroll – initially you must avoid long-term employment contracts. Go for outsourcing and freelancers instead. Strive to reduce overheads where necessary.
When your budget is reserved only for necessary business transactions, you’ll always have enough assets for your operations.
You need to open separate accounts. Using the business budget for personal expenditure is the biggest temptation new business owners face. Some entrepreneurs make this mistake due to a lack of experience. However, others simply relax and start spending their business assets for private purposes. If you adopt such a lifestyle, you’ll have a wide range of problems. Your business will be in the red and it will take a lot of time to put it back in the black again.
To avoid this you need to have two separate accounts. One of them should be registered on your company and used solely for business transactions. On the other hand, your personal account will serve your private purposes. As for the amount of money you will take from your company monthly as a salary, study several different options to find the best one for your business’ long-term financial health.
Also, if you want to manage your assets efficiently, tracking your payments is of greatest importance. Nowadays, banks offer cutting-edge tech solutions that improve payment tracking. That way, you can ask your personal banker to make your own e-banking business account. This package includes receiving a text message upon a payment, access to all your accounts on the Internet, and making online payments. As a result, you will have a clear record of all the payments made to and from your business account. Through this also you can be able to log in and check your balance.
In this day and age, businesspeople can sort out their financial obligations in many different ways. What you should avoid at all costs (literally) is spending cash.
You might not see why paying with cash is different from paying with other means. The key reason for this is the fact that every single business tries to keep their cash as long as possible. Some business owners use it to make another cycle of investments and earn some money along the way. Others just like to have it in case of emergency. This is why business entities should collaborate via invoices, modern payments solutions and barter agreements.
You also need to pay taxes on time. Once in a while, Albert Einstein uttered - the hardest thing in the world to understand is the income tax. It is clear that, paying taxes is a must; it’s not always easy to understand what exactly the tax authorities want from you. As a matter of fact, an inexperienced business owner might even want to pay all the due taxes and still get a penalty, just because they don’t understand how to do it. Luckily, today you can contact and hire experienced accountants from different parts of your country and the world to take care of your tax return. Even better, you can negotiate the terms and take the offer that suits your budget best.
Financial sustainability is the key quality of every modern business. Therefore, if you want to grow your business, you need to nip your ostentatious spending habits in the bud and avoid unreasonable business decisions. These should be replaced by hard work, proper asset management and, above all, clever use of software business solutions.
By Julius Landu Bulili, Business Coach, firstname.lastname@example.org