Three Essential Tips in Finance for Small Business Owners
No entrepreneur really likes spending a chunk of their time with spreadsheets and numbers, when they could be out there, making things happen. Sadly, finances are an unavoidable part of any business and you do need to take care of them sooner rather than later. Also, there’s more to managing finances than just crunching numbers. Now, as you must spend time managing your finances, it’s important that you make that time as productive as possible and these three tips will help you do just that.
Sooner than Later
Bookkeeping is one of the most boring parts of managing finances according to most people, but it’s something that you should never put off for too long. No sane businessman would skip bookkeeping, but they do often end up ignoring it till the last minute. The problem with this is that things get more complicated, the longer you put it off. Break the entire thing down to multiple smaller categories such as expenses, invoices, payments, etc. and update each of those categories on either a daily basis or a weekly basis. If you don’t let things pile up, bookkeeping will neither take too much time, nor will it seem as complicated.
Understand Your Cash Flow
If you are a B2C concern, then your cash flow will likely be constant with periods of both spikes and dips. It is imperative that you note down and understand these spikes and dips thoroughly enough to predict a timeline when they generally occur. If you don’t have a backed up cash amount to supplement your declined revenues during the dips, you are going to have a very hard time running the business. Even when you are running a B2B with long periods between sales or seasonal sales only, you will need to save that backup cash from previous sales to keep your business going during the off-season. Sometimes though, saving money for the slow business periods isn’t enough and you will need to opt for a working capital loan. When you do, make sure that that you go through every little details of the loan stipulations and not just the interest rate. Understanding your cash flow and your sales cycles are of the utmost importance because they will let you prepare for things in advance.
Negotiate for Better Deals
Whether it’s your supplier or some other service provider, do not be shy in asking for a discount when things are tight. Just like you are in business with them, they are in business with you and it’s a mutual relationship where such demands are acceptable occasionally. The success of the negotiation largely depends on your bonding with the service provider or supplier and the size of your usual business dealings with them. If you have plans to put in an unusually large order though, the chances of a getting a discount increases immensely.
A point that we often neglect to consider is that we ourselves are a resource and the most valuable one in our own business. If you treat yourself as a resource, then you will realize that working for an ungodly number of hours every day of the week is not a sustainable model. As the human body will eventually break down, the initial boost seen in productivity due to the extra effort will decline and things will inevitably, go downhill. Work hard, but treat yourself like a resource and make your contributions sustainable.