Starting a new business can be very stressful and managing your business finances properly is going to be crucial to your success. Almost 30% of new businesses go under due to running out of cash.
Create A Budget
The first step to managing your business finances is to have a budget to work from. This will help prevent you from overspending and will give you something to work from when you are creating your projections.
Planning your business expenses and working from a budget will take the guess work out of the equation, which means you will be much less likely to run out of cash unexpectedly.
Make sure to accommodate for all your business expenses, both large and small. It is often the small expenses that add up that take you by surprise at the end of the day.
Make Use Of A Professional
It may seem like an unnecessary expense to hire a professional to assist you with your business finances, but keep in mind that making use of an accountant means that you have someone on hand that knows all about income and expenses, taxes and how to manage your finances.
Making use of an accountant may mean the difference between the success and failure of your business, especially if you are not very knowledgeable in the area of finances and taxes.
What Is The Value Of Your Time?
Knowing what your time is valued at will be essential in your business activities. You want to always ensure that you are making the best use of your time and that you are working on something that has a good ROI (return on investment).
Work out your hourly value and make sure that you are always busy with activities that have a high ROI and leave the lower ROI activities for other people. If you don’t have employees you can always outsource a lot of these tasks so you can focus on the most important business tasks.
Minimize Your Fixed Costs
Yes having a fancy office and the latest gadgets to work with is always awesome but do you really need these big expenses especially if you are just starting out?
Make sure that you only spend money on the absolute essentials and keep that to as low a cost as possible. If you need a new laptop don’t buy the top of the range and instead of renting office space see if you can hold off getting your own office for as long as possible by working from home instead.
Watch Your Cash Flow
Make sure that you know exactly how much cash you have on hand at all times and know what expenses are coming up too so you know when to expect highs and lows in your cash.
It is not going to do you any good landing a massive job when you are not able to front the cash expenses to complete the job before being paid by your customer.