Bad money management is not a good thing and can be very damaging for businesses. In this blog post we share some tips with you to help you manage your business finances successfully. Learning how to properly manage your business finances can take time, but once you know how, business (and life) will become a lot easier.
Create a Budget
A budget is really important when you are running your own business. Take the time to figure out how much money you will have coming in. Also look at how much money you have going out. By understanding your expenses and income you will be able to set up the right budget for you personally but also for your business. Include things like savings too, as an example.
Understanding Your Expenses
For one month keep a track of all the money you spend. Keep all your receipts and write everything down. Keep a record of all the money you spend, whether this is credit cards, via PayPal, in cash and online payments too. Then look at the fixed costs, insurance for example, and the variable costs, such as meetings in coffee shops or one-off purchases. This will show you how much you are spending and how much you could / should be spending or saving. We would recommend that you look back on this over time and compare too.
Understanding Your Income
When you run your own business it is unlikely you will have the same income each month. Take a look at what your income was last month. Now take-away the figure you came up with your monthly expenses. The long and short of it is, if your expenses are higher than your income you are left with a negative. This may be manageable in the short time when you are setting up your business, but this will need to change. If you are outgoings are higher than your in-comings then you need to look at reducing those expenses.
Create an Emergency Fund
We never know what is around the corner. The coronavirus outbreak has been a perfect example of that. It is essential that you create an emergency fund, so if there is an unexpected emergency, you are safe. This could be a computer dying and an emergency purchase being needed to replace it. Alternatively, it could be like the coronavirus outbreak and your business has to go into lock down. Having an emergency fund will make running your business easier.
Speak To an Expert
Why not book a series of coaching sessions with us so you can learn about how to better manage your business finances? This will be an additional expense in the short term, but it will help you so much in the future. By good business finance management you are better prepared for running a successful business for years to come.