The first and foremost step to expand your business is to take a pause and look back. This is a step where you will get your finances in order! It helps you forecast where your business is headed, and when you know exactly how your revenue and expenses are stacking up, you can begin to make more informed decisions for your business. Following are some tips to get your finances in order.
1. Keep your Red Wine and Vodka Separate.
Just like mixing these two combinations create a trouble, mixing your personal and business finances will inevitably result in confusion. It seems convenient to charge everything to a single card, but ultimately this will make tracking your business spending far more complicated than it needs to be. Hence open separate bank account and get different credit card for your business.
2. Find a Trusted Financial Institution
Relationship between Business owners and Banks/Credit unions should resemble an invaluable bond between carton characters Mickey Mouse and Pluto. Make it a point to seek out the best one in your locality, and make sure they understand your business needs. Some advantages of choosing credit unions over banks include fewer fees and charges, as well as flexible, customized services.
3. Stay Organized and Plan ahead.
If you aren’t looking at the future of your business, you could be taken by a surprise. If you want to get ahead and stay ahead of the competition, you should plan as much as 10 years in advance. Part of it should include creating a budget. Many business owners view this step as mundane and redundant, but the importance of a budget could be equated with the value of a well-formed business plan. Hence, your business budget should be an evolving document. Don’t let your budget force any decision on you rather use it as a guide.
4. Software Software and Software
Gone are those days when only physical copies of records were maintained. Even accountants today are moving from older desktop software to more sophisticated cloud-based accounting software, while incorporating blockchain and AI in their practices. Remember Microsoft spreadsheet is not a financial tool. You need to invest in business accounting software that can track all your finances. This is the only way you’ll have insight into exactly what comes in and goes out every month so you can strategically plan. You should view expenses as dead weight in your small business and the greatest barrier to small business financial success. So, before you spend, ask WHY three times, and get three different answers. Review your income over the last two years and develop an income forecast for your business. By knowing where your money is coming from, you can analyze what you did to earn those sales, including an understanding of:
•Who are your customers?
•Why are they your customers?
•Are there additional services you can offer them?
•How can you reach more prospects?
5. This is not a one man show, Get the help
If managing your own finances is starting to get on your nerves, it’s time to look into hiring a professional bookkeeper and accountant. Although it’s easy to balk at the expense of working with a bookkeeper, they will be able to help you save money over the long haul, so never try to do it all alone. For more information, contact IDM Professional Corporation CPA/ Ishali Mulchandani CPA
