Every business has to worry about managing their money at one point. Financial management is crucial to your business’s success. Every business needs to implement a financial structure to stay successful. Here are six tips from Saleh Stevens for setting up your business finance department.
1. Educate Yourself
One of the most important things you can do for your business is to educate yourself on finance. For example, you can learn how to read financial statements. This tells you where your money is going and where it originated from. Financial statements consist of four important pieces of information:
Balance sheet
Cash flow statement
Income statement
Statement of shareholders’ equity
The cash flow statement gives you an overview of your investments, financial in/outflow, and operating activities. The balance sheet has important information about your company’s assets, liabilities, and shareholder’s equity. Meanwhile, the income statement shows you earned revenue during a certain amount of time. The shareholder’s equity is the amount that your company financed through common and preferred shares.
2. Cut Costs
It’s important for all business owners to cuts costs to keep their expenses in check without decreasing customer satisfaction. Every business — big and small — has two types of costs: fixed and variable costs. Fixed costs determine if your business is generating money or not. Variable costs reveal how you’re saving those costs. For example, investing in cloud-based software is a good alternative to investing in hardware, software, and a server.
3. Hire Professional Help
Everyone’s going to need help at some point. Sometimes it literally pays to have a financial expert, especially if it’s on a part-time basis. A certified account or financial planner can help you determine where your business is headed by analyzing and using your data. You want to find a certified financial planner (CFP) who are also licensed and regulated. Whether it’s for financial planning or tax planning, a financial planner can give your business the guidance it needs.
4. Consider Insurance
As a business owner, insurance is one topic that comes up often. While you may hate paying for it, you need it. In order to create a profitable portfolio and manage your finances, you need to find out what’s good for your business needs as well as your personal needs. Insurance provides your business with financial security. With time, you may want to extend this coverage to your dependents such as your children or elderly parents.
5. Invest in Technology
Not only should you invest in a financial planner, but you should also invest in the latest technology. Sometimes it’s better to use accounting software that keeps your accounts and finances in good standing order. You should also use bookkeeping software for understanding the finances of your business and budgets. There are certain types of software that also assist with paying taxes.
Most businesses utilize the professional services of accountants who are knowledgable in this software. But with the latest advancements in technology, anyone can use accounting and bookkeeping software to manage their records. You just need to invest in a high-quality software program.
6. Keep Track of Your Money
Even small businesses are required to have their payment terms outlined efficiently and precisely for managing their finances. Even though it poses as a challenge, you need to account the financial and legal side of your transactions and track all movements with your money. Keeping track of your money allows you to determine which areas are performing efficiently and which area you need to control your funds. You should also study this information to create a budget and track your progress to ensure it fits within those limits.
While starting and running your own business is exciting, it can also be challenging, especially when it comes to handling finances. You don’t want your business to suffer from poor money management. Keep the following tips in mind from Saleh Stevens and apply them to give your business a brighter future. The more you improve your business finance department, the better prepared you are to make smart financial decisions.