Starting any new business venture comes with it fair share of challenges. Perhaps the key stumbling block for most small business owners is related to the efficient management of available capital to not just keep the company operational, but also to grow it effectively.
Yes, it is true that you can make wide ranging changes to your current operations process to give your business a financial lift, but in this article we will focus on some of the simpler measures you can initiate in the daily operations of your business to give it a financial overhaul.
These practical tips will ensure that you manage available resources better, which means that you will automatically be using all the financial resources available to you in an effective manner.
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Never Mix Business And Your Personal Expenses
There are many reasons why you should refrain from mixing your personal and business accounts, including, personal liability, tax issues and entangled accounting records amongst many others.
If you are currently dealing with a cash flow crunch, it could be very tempting for you to divert some of your personal funds to your business accounts. But, always resist the urge to do this. Why? That’s because more often than not this will lead to an even bigger mess that you will have to address at a later point in time.
The ideal way to ensure that there is some degree of separation between your expenses is by setting a clear personal as well as business budget. Creating a budget is only half the battle as you will have to adhere to it strictly at all times.
Ensure that you keep your personal credit cards and loans separate from those taken for your business. This will help you avoid a situation where funds are taken out from your personal account for a business expense and vice versa. Your accountant or bookkeeper will thank you for doing this come tax season.
Negotiate Good Terms From Your Suppliers Before Agreeing on a contract.
Getting a good bargain can be tedious, but it can have many long term financial benefits for your business. Always look to negotiate a fair deal from your vendors or suppliers. Also read the fine print of the agreement carefully before signing on the dotted line.
Check important factors like late payment fees, extension periods along with other important payment terms. Sometimes it is better to have an extra 30 days to pay off your supplier than an upfront 5% discount.
Always, Always Pay Your Bills On Time
Just like your personal liabilities, it is important that you pay all business related expenses in a timely manner. Late payment fees on loans and credit card payments can be extremely costly.
Even if you feel that the late payment fees that’s going to be charged is comparatively small, you have to take into account when these small payments start piling up, it leads to a significant amount.
The same applies for your tax bill. Late payment in this case can lead to significant penalties.
Create monthly reminders to ensure that you are not falling behind on any of your business bills.
Profit margins are usually extremely slim for a startup business and by avoiding late payment fees, you could ensure that your company is in the black at the end of the financial year.
Being Frugal Is A Good Thing
You don’t have to actually collect all sorts of available coupons to pinch money on normal business expenses. But you could do the following to save money on some of your business expenses:
- Follow through on rebate offers for office supplies and equipment that you have received through mail.
- Buy equipment or furniture second hand or lease them.
- Implement green measures to save on your energy bills.
By developing a deeper level of understanding about business cash flow and finances, you will be better equipped to take smarter money management decisions for your business. However, while these tips can help you regulate your cash flow, it might not help you to address a major requirement of capital.
In such situations you could approach a reputable alternative finance provider and apply for cash flow finance. Don’t know how cash flow finance works? Click on the link to know more.
It is also important to keep in mind, that while these tips will help you at the outset, you still need to be hands-on and proactive when managing your business finances.