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As a small business owner, the sheer mention of the word finances may be enough to send you into a spiral. If this is the case, you are not alone. Whether you are a first-time business owner or experienced entrepreneur, it takes a considerable amount of time and effort to perfect the art of managing your finances. Continue reading to find out everything you need to know when it comes to managing your finances as a small business.
Remember to pay yourself
When it comes to establishing a small business, growth and development may top your list of priorities. As a result, it can be easy to divert your focus to the daily running of the company and forget to pay yourself. If you are a first-time business owner, this step may feel unnatural and strange at first. But by getting into the habit of paying yourself on an ongoing basis, you are more likely to remember to compensate yourself for your hard work and effort going forward. This is especially important in the event that your business fails at the first hurdle or fails to generate enough income to continue operating.
Hire an accountant
As a small business owner, you may be making a conscious effort to minimise your spending habits if and when possible. But by taking on too many tasks, you risk falling victim to human error and making a number of financial mistakes that can be extremely costly and time-consuming to remedy. This includes mixing your personal bank account with your work bank account and neglecting business insurance. But before you do so, you must ensure you do your research ahead of time. For example, by researching top-rated accountants in London, you can find the best accountant for your individual business needs and wants and take a step towards managing your finances on a company-wide scale.
Perfect your billing strategy
Regardless of whether you are a small business owner or entrepreneur, you must perfect your billing strategy. If you are familiar with the process of running a business, you may have encountered a client that is consistently late when it comes to paying bills and invoices and how frustrating it can be. By managing your cash flow on a day-to-day basis, you can ensure your business is operating at maximum efficiency and protect your finances going forward. If you find yourself chasing up a particular client time and time again, it may be time to rethink your billing strategy.
Maintain good business credit
As your company continues to grow and develop, you may be tempted to expand your existing investment portfolio. But in order to do so, you may require another loan. If you have poor business credit, you will struggle to be approved for business transactions, pursuits, and acquisitions regardless of how large or small they may be. This is one of the main reasons why it is important to maintain good business credit from the very onset. This can be done in a number of ways including paying off outstanding debt at the earliest convenience and paying off your business credit cards within a predetermined period of time. You must also avoid applying for a loan with an interest rate that you can’t afford to repay now or are unlikely to be able to afford in the future.
If you are a small business owner, there are several steps you can take to help you manage your finances. This includes remembering to pay yourself, hiring an accountant, perfecting your billing strategy, and maintaining good business credit.