Corporate or small, a farm or a dairy, managing money is the fundamental discipline that a business requires to thrive. While every business incurs a phase when staying afloat seems like a hurdle, it’s possible to pass that by keeping your hands closed and possibilities open.
1. Owning Deadlines:
Keep track of the deadlines. Remember or take note of when your bills, loan payments, and rents are due. Failing to stay on top of deadlines can be expensive. Not having enough money on hand at the appropriate time calls for a late fine or interest.
As your business is small, your employees might not earn as much as the corporates. Thus it falls on you to ensure that their payment is not delayed.
2. Keeping Track of Spendings:
Being a small business owner means a lot of micro spendings. As you are the sole proprietor of your business, there’s no one to stop you from spending on, say, two consecutive staff dinners. While it’s not bad for your business to occasionally treat your employees with a dinner of gifts, these small expenditures add up.
You must have multiple accounts. Credit account, savings, checking account. Keeping a track of each one of them is very important to keep your small business afloat. If you are unable to scrutinize your purchases, try having an accountant in house. Entitle them to take notes of the company withdrawals and report to you if anything seems out of ordinary.
3. Customer Credits:
If you are a small business that thrives on customer credits, after a while that can turn into an overwhelming bundle of liability. Being a small business, you might forget due payments beyond their date and even face a loss.
Keeping a tab on customer credit receivables, creating accounts for each of them can help you stay afloat or even thrive. One or two missed dues may not seem that important to you, but eventually, they’ll add up. Early payment discounts and discount coupons are feasible ways to manage your inbound revenue efficiently.
Not only customer credits, keep track of your inventory too. If you’ve made payment somewhere, check if those orders have been fulfilled and are ready to be shipped.
4. Separate Personal and Business Funds:
It’s not necessary to keep your personal and business funds separate, being the sole owner of the company. But a business account offers such advantages that a personal account doesn’t. Like generating monthly statements and keeping track of spendings.
When you have a sizable income from your business, which goes directly into your personal account, how are you supposed to know if you are spending from your business funds or personal? Separating personal and business funds also can help you submit documents to authorities when required.
As you can’t touch your employees’ funds in crisis, treat yourself like one. Keep business and personal funds separate and encourage yourself to be more transparent.
5. Inventory Management:
Managing inventory doesn’t end at tracking. If you constantly run out of goods or let products collect dust in the storage, you need to manage your inventory better. Improving how you manage inventory can help you manage money in your business.
Track how much inventory you have in your storage and see how the market is trending. If you feel that you need to stock more products for the upcoming week, most probably you are right. But, if you notice older stocks not being operated, offer a discount to clear them out.
If you start keeping track of inventory today, after 2-3 weeks, you’d have a clear picture of how much time it takes for the goods to reach you and how long before you need to order. While delaying an in-demand order might not be the best strategy, optimizing the shipments can save a lot on wasted products and discounts.
6. Set a Money Budget:
A budget is like a guideline that you cling to to ensure a comfortable earning and spending balance. Despite budgets being prone to failing, it gives you a metric of how much you can spend in the upcoming month. Typically, budgets are based on an estimated earning. If you see your business failing to adhere, try increasing the income.
A failed budget is an indication of either over expenditure or losing revenue. Try adjusting both of them to find a middle ground.
The Bottom Line:
I admit that it’s not always easy to cut expenses and manage inventory running a small business. But, if you need to stay afloat in this tough time, try to set a budget, and keep credits on the bay. Always manage yourself like you manage your employees and keep funds separate.
While it won’t be possible for you to always focus on these points, try incorporating some of them into your day to day business operations to ensure success.
Yuly Olofsson is a content writer who likes writing about education, business, and https://mypaperwriter.com/. She is also happy to discuss how your small business can survive and thrive in these troubling times.