5 Helpful Tips to Keep Your Finances in Check

Starting and running a new business venture is nowhere near easy. Whether you are an entrepreneur starting a new business or someone who is already running a business, you would know that this is true.

Business owners always tend to be occupied with one thing or another. You are likely to find yourself playing various roles throughout the day, as you take care of every department within yourbusiness, from marketing and sales to HR and accounts.

The biggest challenge out of all of these for any business owner is learning how to manage its finances effectively.  While a few business owners have the qualification and expert knowledge needed to keep their finances in check, most find it a constant struggle. The first problem is finding the funds to start the business and keep it afloat. With little success to their name and a risky new business idea, it is often difficult to find lenders willing to finance small businesses. It is also difficult to decide which financing option would be most suitable given the business’s small structure and tight financial situation. Next comes the problem of finding ways to control costs. In the highly competitive markets that businesses operate in today, revenues can be highly unpredictable. One moment you might be doing well in the market and the next a new competitor may enter the market with a better product, taking away your customers. In such a situation, cost control is always essential in order to make sure the business avoids a loss-making situation when things get difficult.

To help you through avoid any financial troubles, we have compiled some useful tips to help you determine the best financing options for your businessalong withways to keep your finances in check.

Finding the right business loan for you

The first step towards getting a business loan is understanding the different options available and their requirements so that you can select one that best suits your needs.For a small business, short-term business loansare often better than those requiring a long-term commitment. They can be paid back within six months to a three-year period, which makes them the perfect optionto meetmost of the business’ occasional cash flow needs.

Short term business loans work a lot like credit cards, but with greater benefits. You can secure a greater amount than a credit card, and have a much longer time to pay. They are also more flexible in the way that they allow you to choose a repayment plan most suited to you. In that way, you can make use of the funds, without immediate pressure to pay back the loan.

If your business has the occasional cash shortfall and needs a solution, a business line of credit is a great option. It gives you a limit on the amount of funds you can withdraw, whenever needed. Interest-only needs to be paid when you use the facility. You can look for the best small business lines of credit and keep them on hand for emergencies.

Tips to Keep Your Finances in Check

Juggling business finances is tricky, and it can make managing a new business so much more stressful. Here are some of our top tips to help you out:

  • Stick to a fixed budget.

If youmake a monthly budget and try to stick to it from the start of your business, you are more likely to stay organized and ahead of your loan repayments and other obligations. You will make sure that your expenses stay within acceptable limits and any expenditure that it off the budget is only undertaken if extremely necessary.

  • Try to save as much as you can.

If the business follows a strict budget and keeps its expenses under control, it increases its chances of survival in difficult situations. Since it will limit its expenses to those that are necessary and avoid any extra expenditure, it will be able to keep its costs down, increasing profitability. You may also be able to save money during times of business prosperity. Savings can help the business in financial emergencies and situations where you may need money to pay debts or any other bills and payments.

  • Stay calm and seek help when needed

Starting a new business can be overwhelming and stressful because of all the challenges the business faces. The first six months, in particular, are the hardest to get through, when you open a new business that no one knows about and need to build everything from scratch.

Staying relaxed and keeping your head up is difficult in such a scenario, but it is highly important. You have to try and stay optimistic that things will get better with time. Your employees and the work that you do are always a manifestation of your behavior and how you react to everything around you. By having a clear vision and not getting caught up with unnecessary stress, you can lead your team and your business in the right decision. If you find yourself struggling with finances, you can always hire a financial advisor to guide you on complex matters.

  • Keep long-term goals in mind

When starting a new business, most business ownersonlyplan on how they will manage finances during the first few months, without considering their long-term goals. They think that long-term goals should only be set once the business has survived its first year or so. However, it is important to think long-term from the beginning and remember what you really set out to achieve in the first place. Once you know what you are after, it gives you a clear sense of direction for your business and from it, you can set clear financial targets to achieve. For example, you can set goals for the first 5 years in business and break them down into targets for each year.

Keeping long-term goals in mind will make you plan ahead and provide you and your team with the motivation to drive the business forward in your desired direction.

  • Hire a professional accountant

Let’s face it: unless you have thorough accounting knowledge, you cannot maintain the accounts of your business yourself. Many entrepreneurs make the mistake of trying to handle every business function by themselves. While this is possible for some non-technical functions, it is a very wrong approach to take for something as important as the management of your business finances. You may think that you can keep track of your income and expenses and maintain sound accounting records, but it is a bad idea.

Let a professional handle the numbers and tell you about your income, expenses, profits and cash flows for the period so that you can make sound decisions based on accurate information. He/she can also help make forecasts of future financial performance so that you can prepare ahead of time and avoid any unpleasant surprises.

Conclusion

At the end of the day, it is important to know that no entrepreneur is born an expert at managing their business finances. With time, you learn everything there is to know as you go about running your business. Just make sure to maintain proper records from the beginning and review your financial performance regularly to ensure you stay on track to achieving your financial goals. These tips will get you started in the right direction.

 

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About the Author: Jacob Wyatt