Proper financial management is a cornerstone of any successful business today, regardless of your preferred market or industry. Without the ability to oversee financial decisions, investments, and expenses in real-time, managing your company’s profitability, investor relations, and sales can quickly become tedious, time-consuming, and ultimately, even overwhelming. Learning the basics of budgeting and managing finances is crucial as a business owner, investor, or serial entrepreneur, regardless of the markets and industries you’re most drawn to in a professional capacity.
The importance of budgeting basics
Learning the basics of budgeting is imperative, whether you’re managing your household’s budget or investing in a small business of your own. You will need to define and outline a complete business budget to account for potential investments, inventory, staff, taxes, and even legal or consulting fees you may require from time to time. Budgeting basics will help you monitor expenses, income, and profitability. Using a centralized platform where you can manage your financial decisions from one location is highly recommended to optimize your potential for success.
Create a basic business budget
Collecting as much market data and information as possible involving your industry is essential when you’re just getting started with a new business. You will need to estimate projected revenue and income, expenses, and categories of expenses that should be monitored. Allocating the resources you have available and require effectively will also prevent you from overspending on services and additional products or solutions you simply do not need.
Setting short and long-term financial goals
Setting both short and long-term financial goals will help you stick to a realistic vision and plan of action you have in mind for your business. In addition to reaching important business objectives, you will need to align your financial goals with said objectives to avoid finding yourself in debt early on. Sticking to short and long-term financial goals can also help you remain focused on priorities that are most important for the future of your business.
Work with a professional CPA or business advisor
Whether you’re seeking personal loans and personal investing services or you’re interested in crowdfunding or working with an angel investor or VC (Venture Capitalist), it’s important to consider your exact needs before you settle on a decision that is right for the future of your latest business venture. If you’re new to business management or entrepreneurship, working alongside a local CPA (Certified Public Accountant) or business advisor is highly recommended. Working with professionals who understand the ins and outs of business and financial management can ensure you’re on the right track in any market or industry you’re targeting.
Monitor sales and cash flow routinely
Cash flow is another vital element of running any business, regardless of the industry you represent or the market and niche you’re targeting. Monitoring cash inflows and expenses with visualizations and graphs can be extremely valuable and insightful, especially if you’re determined to maintain a positive cash flow. Working alongside an accountant or qualified CPA in addition to implementing cash flow management software is highly recommended if you’re new to budgeting and handling the finances of a business in any capacity.
Take care of taxes on time
Tax management is another crucial element of any business, especially once you begin generating a profit or even hiring employees and contractors to work for you. Ensuring your taxes are filed appropriately and on time is also essential to minimize the risk of increasing fines and fees from the state or federal government. One way to streamline the process of managing your business taxes, payments, and financial obligations is to do so with the right tax software and document checklist. Working with a CPA is always advisable once your business begins to grow to ensure you can keep up financially as it continues to scale.
Incorporate an expense management system
Managing your finances involves expense management when it comes to running any business today, local or online. Without an expense management system, handling incoming invoices, outgoing expenses, and even payroll taxes can quickly become stressful, overwhelming, and downright time-consuming. Incorporating the right expense management system will help you manage incoming and outgoing expenses, taxes, fees, inquiries, and even returns or disputes in one centralized location. Managing your finances using one platform will save significant time while streamlining operations and improving the accuracy of your financial management abilities.
Track financial reports and analytics regularly
Tracking financial reports and analytics in real-time can help you visualize the overall success of your business venture. You will also want to learn about various investments you can make as a small business owner, such as bonds, stocks, and additional real estate, to help with growing and expanding your portfolio. The right investment strategy can help ensure your business remains profitable and afloat, even during difficult economic times or when experiencing a market upset.
Debt management strategies
Learning the differences between different types of business debt is necessary for anyone interested in going into the world of entrepreneurship. Working with a CPA or business advisor can also help with strategizing effective debt management along with potential refinancing and consolidation solutions, as needed. You will also need to ensure you can maintain a good credit score if you’re running a business as a sole proprietor or independent entrepreneur.
Emergency and contingency plans
Creating an emergency fund is always advisable as a business owner or investor. Determine how big of an emergency fund you should build by consulting with your CPA or business advisor. You will not only want to create a plan for building up an emergency fund, but you will also need to consider contingency planning for potential legal issues or unexpected financial challenges you may face at some point in the future.
Knowing how to handle your company’s finances and important financial decisions matters as an entrepreneur or investor, especially if ongoing success is a priority for you. The more actively involved and engaged you are with the process of overseeing and monitoring financial data, the easier it will be for you to foresee potential obstacles, challenges, or financial strains you may need to plan for in advance. With an understanding of budgeting basics and managing finances for small businesses, you can move forward with your current business plan feeling comfortable with and confident in the decisions you will need to make.
Author: Megan Isola holds a Bachelor of Science in Hospitality and a minor in Business Marketing from Cal State University Chico. She enjoys going to concerts, trying new restaurants, and hanging out with friends.
300 Views
Trending Articles
