The whole world is at the dawn of another depression, so a substantial number of people are going to become redundant in their companies. Some of them will try to launch their own businesses to make ends meet. Even though they might be distinguished experts in their niche, it doesn’t mean that they’ll make outstanding business owners.
When company employees think about starting a business, they’re often unaware of all the bases they need to cover. Being a skillful and experienced business professional is one thing, but taking care of business is something completely different. What lies at the core of such an endeavor is efficient financial management. The purpose of this article to help such new SMB-owners to run their finances like big shots.
1.Keep all the records
The main difference between being an employee and an employer is the level of responsibility. Workers’ efficiency is based on the tasks they receive from their managers of employers.
As a business owner, on the other hand, you’ll have a lot on your plate. If you lose track of your accounts payable or receivable, or – God forbid – lose sight of your tax payments, you can ruin the entire business effort.
That’s why it’s important to keep all the records of all your obligations and responsibilities. From overhead expenses – office rent, utility bills, travel expenses – to the payroll and due payments to clients and suppliers, it’s important to stay organized. Using FreshBooks or other similar accounting apps will help you keep all the electronic records in the same place. You can connect your bank account with such apps and monitor your entire expenditure and financial reports.
2.Store print documents
Even though today entrepreneurs rely on electronic documents, some documents still need to be stored as hard copies.
This includes official agreements with clients and contractors, contracts on bank loans and leasing, as well as employment or outsourcing contracts, professional licenses and certificates, various university and course diplomas, tax returns, etc.
It’s necessary to arrange those print documents in an organized and easily searchable way. In that light, every SMB-owner should count the number of categories for his/her business documents in print. After that, you should buy the same number of file folders for each of these groups. Now you can start arranging your documents and you’ll always know where you can find each of them.
3.Firewall personal finances
Business management is no child’s game. Since your existence depends on the energy and time you invest in your business, your entire work time organization will have to change. As reported by Gallup, about 40% of SMB-owners work more than 60 hours a week.
Closely related to the topics of time management and organization, entrepreneurs need to protect all their personal assets. As you may know, your business liability depends on your business structure. Limited liability companies (LLCs) are a good option because they are separate legal entities from their workers. Still, tax payments and current expenses are usually higher for such business forms.
Sole proprietorships, on the other hand, mean that the business owners guarantee for their business assets with their personal assets. In other words, if things go wrong, business-wise, you might have to sell your personal belongings to pay your debts.
To cut a long story short, it’s vital for your business growth and peace of mind to firewall your personal finances. If you register sole proprietor, always keep enough money on your business accounts to cover all your current costs and expenses.
4.Pay due invoices on time
Making due payments on time is one of the crucial elements of every successful business entity. If you start falling behind with your accounts payable, you’ll soon find yourself lost in the whirlpool of unpaid obligations and real financial havoc.
On the one hand, you need to ensure that you have enough assets on your business account on due dates to pay outsourcers, suppliers, and other collaborators.
On the other hand, it’s equally important to make sure that your debtors make their due payments on time. Strict discipline in these business aspects will result in steady cash flow and stable liquidity.
In that light, bring a set of invoicing rules, in which you’ll specify the payment deadlines for your clients (15 or 30 days or longer periods for VIP-clients), automate some invoice features, and keep records of all your accounts payable and receivable.
5.Rely on free marketing
Saving assets wherever possible is one of the key principles of wise business management.
For most SMB-owners, maintaining smooth cash flow is no cakewalk. Since they usually can’t afford to hire too many employees, they work longer hours than company workers, as highlighted above.
Still, you can achieve a lot in terms of marketing and promotion without money thanks to the omnipresence of digital marketing.
In line with that, launching a business page or profile on social media is a must. Facebook, Instagram, and LinkedIn are the three key social networks for average SMB-owners. You can use them to promote your business products and services for free. Also, social media give you a chance to target audiences and clients from every part of the world.
What’s more, today you can build a website on your own for free. Those more demanding SMB-owners, who may need more complex websites, can learn the design basics on their own or ask experts for help, as elaborated by the designers behind a digital agency in Houston.
Finally, email marketing remains one of the most powerful free marketing tools for new SMB-owners. From sending newsletters and promotions to tailor-made offers for special clients, email is a valuable digital tool.
There’s an entire science between SMB financial management. New entrepreneurs need to learn as much as they can about these features to hold the financial reins in their hands. If you want to be organized with your business finances, don’t delete or throw away your business documents. Also, pay your obligations as they come, and don’t pay things that are available for free or at symbolic prices. All these tips will pave the way to a long-term and successful enterprise.
Author Byline: Liam Collins is a tech pundit and Web enthusiast working at TuiSpace.com. He spends most of his time reading and writing about the current affairs in the world of information technology. When he isn’t working, he likes going for long bike rides and walks in nature.