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11 Tips to Manage Your Small Business Finances

A small business CEO has a lot to juggle – not just making sales, figuring out marketing and tackling issues such as manufacturing, but acting as the company’s chief financial officer, too. And while it’s easy to let some to-dos slip, you can’t let things slide when it comes to your small business’ finances.

Money obviously is the lifeblood of any business, which means it’s your job as the all-in-one leader to make sure that blood keeps pumping. However, that job involves far more than simply selling more products or subscriptions – it means things like figuring how best to spend your money, finding and planning for achievable tax breaks and even taking care of yourself.

The following are some tips you’ll need to manage your small business finances – from clearing tasks to less apparent actions that nonetheless end up being important to the financial health of your company.

1. Build (and Stick to) a Budget: Construction companies don’t start building a house before an architect hands them a set of plans. Coaches don’t enter games without a strategy and a playbook. And small businesses can’t reasonably go out and succeed without a budget – a financial plan that dictates where they should be at a point in the future, and how to get there. The most basic budgets will include projections for things such as revenues, profits, capital expenditures and cash flows. Learn how to build a budget, then, and you’ll have a document that acts as both a guide and an early warning system.

2. Improve Your Revenue Forecasting Skills: One of the most critical skills for building an accurate budget is being able to forecast revenues. When you learn how to produce more reliable forecast revenues, you generate a cascading effect of confidence in everything else you must predict: How much you can spend on employees, rent, building out your facilities, etc. Inaccurate revenue forecasts, however, can leave you in a pile of red ink at year’s end, wondering how everything went wrong – and how you can possibly make up the shortfall.

3. Become a Better Cash Flow Manager: While profits are what your company actually makes from revenues once various costs are accounted for, cash flow is the actual cash you have to spend. In other words, profits and cash flow aren’t the same. You might be projected to make a profit at the end of the year, but depending on how you collect from customers, you could find yourself in cash deficiencies throughout the year that keep you from properly paying a vendor or landlord. So learn more about cash flow, and how to improve it.

4. Open a Small Business Bank Account: Opening a small business bank account is one of the first things you should do when starting your own company. So if you haven’t yet, start your research today. In short, a small business bank account can provide legal protection within certain types of business structures, they cause fewer headaches in accounting and they simply give off a more professional air than writing personal checks to your partners.

5. Pay Off Small Business Debt: Small business debt isn’t the enemy – if it’s well managed. It can help provide much-needed capital for growth, or save you when you’re in a pinch. But if you’re ever in a position to pay off your small business debt, whether it’s a lot, some or just a little, do it. Debt interest can become a rock around your neck, siphoning money that could have gone toward growing your company rather than enriching the bank. And the more you owe, the more you’ll have to pay. So chip away at your debts as quickly as your business can afford.

6. Find Financing: Many small businesses can’t fund themselves from profits alone – they often have to find additional financing. This can range from grants and loans to venture capitalists and angel investors. And naturally, almost every other form of financing wants something in return for their upfront money, which is why it’s important to learn about the various forms of financing. (That’s also another reason to pay off your IOUs: It’s much easier to get a loan on good terms, or appear more attractive to a would-be investor, if you’re not waist-deep in debt.)

7. Create an Emergency Fund: Building a rainy-day fund is one of the most difficult things for a small business owner to do. That’s in part because money is typically so tight that there’s none left over after paying all the bills, and when it is, you want to put every cent toward growth. But disasters do happen, and having the cash on hand to deal with it can prevent you from running to the bank, both hands held out, forced to accept whatever terms they give you because time is short.

8. Learn About Payroll Apps: This bleeds into the role of chief technology officer, too, but it’s a tip worth heeding. If your company is budding and you have a small staff, payroll apps can save you a lot of time and hassle by automating tasks you’re probably not experienced with in the first place. These apps can do everything from creating paychecks to logging hours to even dealing with the tax implications of having a staff.

9. Invest in Cybersecurity: Protecting your digital operations might seem like a way to merely reduce future headaches, but in reality, it can save your company’s life. A report from Cisco Systems and the National Center for the Middle Market found that hacked companies have a 60% fatality rate after just six months. So yes, cybersecurity is a financial essential.

10. Go Paperless: Few to-dos have such obvious benefits as digitizing your office. Going paperless helps save on paper, printer and maintenance costs. Just as important, relying on digital filing rather than paper helps cut down on mistakes – and the benefits range from having to put out fewer fires to not making a critical gaffe come tax time that results in an audit and fines.

11. Pay Yourself: How does making sure to pay yourself help your small business’ finances? Well, personal money matters (specifically, wondering about how you’ll pay your rent or make your next grocery trip) are a massive distraction that keep people from operating at their best. And if you’re the sole or primary driving force behind your business, imagine how your business will operate with those bricks on your shoulders. When you pay yourself, you make sure that your company’s most vital employee is happy and productive.

This is just a short list of small business finance tips that entrepreneurs have to keep up with as they try to keep their companies afloat. Needless to say, it pays to have some help – experts who can not only keep tabs on you, but perform many of these necessary functions without the high expense of a full-time staff. McManamon & Co., and its team of professionals that boast decades of experience, can assist small and midsize businesses with all these issues, as well as tax services and other accounting needs.

There’s nothing small about small business finances, so don’t try to shoulder the load yourself. Call us 440.892.9088 or contact us online today, and we’ll buy you the time to balance your many responsibilities.


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