One of the most common mistakes made by small business owners is the failure to properly manage their finances. The trouble with improper money management in business is that cash flow is the lifeline of the business. Even the simplest mistakes or lack of knowledge and resources could cause serious issues for your business in the near future. Thatâ€™s why it is important to not only learn tactics to effectively manage your finances, but also to employ people and invest in resources that can assist you. Check out this list of tips and resources complied below:
1) Work with a Mentor
Though you may not have thought of a mentor as a resource for financial education, they can be very helpful in this aspect of business. By linking up with business professionals in your industry, they can help you in setting up finances and give guidance as to which resources are best for referencing in the future. There are plenty of platforms you can utilize to find a mentor that best fits your personal and professional needs including the Association of Small Business Development Center.
2) Invest in Accounting and Finance Software
When youâ€™re unable to allocate the funds to hire a full time accountant, the use of certain financial software can aid you in keeping track of your companyâ€™s finances. While it may be necessary to consult with an accountant or bookkeeper on a periodic basis, software is a great platform to start with. It will however, be important to select the right programs for your financial needs. For instance, if youâ€™re interested in receiving help with taxes, working with programs like ADP business tax credits and incentives can help you with complying with tax laws while also finding savings on your annual returns.Â
If you need assistance with day to day financial record keeping, then going with accounting software like QuickBooks would also be beneficial.
3) Outsource or Consult with an Accountant
Depending upon your company budget, you may not have the financial means to hire an accountant or bookkeeper, but there are ways to still invest in these services. Outsourcing or consulting with a financial expert on the periodic basis can help to keep your finances in order. Accountants are able to record and manage your cash flow, help you in making informed decisions, and ensure that youâ€™re in compliance with any business regulations. However, because youâ€™ve hired them on an as needed basis it wonâ€™t cost as much as having someone on staff full time.
4) Invest in Accounting Education
While you may have software and consulting services in place as it pertains to managing your finances, it can hurt to educate yourself as well. Taking accounting courses or trainings as they become available can keep you current on new trends, laws, and regulations within your industry. When considering trainings and educational courses, be sure that you only register with reliable sources as learning the wrong information could prove problematic for your business. Checking out reviews or searching social media pages can be a great way to determine the reputation of a particular instructor or training program.
5) Periodic Measurements and Analysis
It is important to measure your companyâ€™s performance and conduct analysis based on your budget. By reviewing financial statements and reports you can ascertain how to better utilize company funds. Is the cost of vendors going up? Do you need to scale back on the cost of operations? All of these questions and more can be answered by thoroughly and honestly measuring your financial performance.
Your companyâ€™s finances are too important to overlook or complete haphazardly. Whether youâ€™re just starting out in business or youâ€™ve been at it for a while, you should continue to look for solutions that will help to improve your ability to properly manage your finances. Investing in software, working with financial professionals, educating yourself, and conducting honest audits is certainly a great place to start and will ultimately reveal things about your company that you didnâ€™t know.