Listen Up Business Owners: How To Manage Your Finances Like A Boss
Maybe the world of finance mystifies you. Maybe it bores you because you think it’s all about adding up columns of figures. But that is only part of it. It is also about strategy. Maybe you’re in the business you’re in because you enjoy it.
Author:Stefano MclaughlinReviewer:Luqman JacksonJul 11, 202335.3K Shares526.9K Views
Maybe the world of finance mystifies you. Maybe it bores you because you think it’s all about adding up columns of figures. But that is only part of it. It is also about strategy. Maybe you’re in the business you’re in because you enjoy it. Properly handled, your business can make you money, but that is only possible when you get your finances in order. Here are no-nonsense points to keep in mind when doing so.
Have a Clear Plan
You’ve probably heard of an old chestnut called the Five P’s: proper planning prevents poor performance. Never was a truer adage coined, and it applies in many aspects of life, but especially finance. So, get yourself a clear plan. Where do you want to be financially in five years, ten years, and by retirement?
Get Your Personal Finances in Order
Your personal and business finances should be kept strictly separate but that doesn’t mean they’re not intertwined in some way. Before starting out on your entrepreneurial path, it’s essential to get your personal affairs in order first. If you have a child that’s college going age, you might have to be cosigner on the loan, and this could potentially have implications on your future with borrowers. While federal student loans are a popular financing option for college, students can quickly hit the borrowing limit.
This is where private loans come in, but these are only available to students with good credit. If your child doesn’t have an established credit history, they may not qualify for a loan on their own. By cosigning a student loanwith them, it can be a great way to help them pay for college but it does mean putting your own neck on the line, taking responsibility if the student is unable to make repayments on time. What would that mean for your business? You must take this into consideration.
Live in the Real World
Optimism is a wonderful thing. It can get people started with little more than a pipedream and it can help them carry on when times get tough. But there’s optimism and there’s mindless optimism, and the latter is dangerous. Along with neglect, it’s what gets people into financial trouble. So don’t be pessimistic but be realistic. Face the facts as they really are.
Attend to Detail
This is the world of small print, of ifs and buts, and it’s not glamorous but you’ve got to do it. Check the details of any contract before committing to it, and put enough detail in your own contracts, so you get a good deal when someone else signs on your dotted line.
Think About the Financial Side Constantly
That is not to say you should not pay attention to your core business and make sure your offering is up to scratch, but whatever happens, think about the primary function of moneyand how it could affect the finances, for better or worse.
Manage Cash Flow
Discipline is important in business, and controlling what goes out while maximizing what comes in can ensure you’ve always got at least as much as you need. Flowing is what water does, and there’s another phrase in that vein: income streams. Keep the good stuff coming in and if you can find a new source that helps, that’s great.
Deal With Tax
Tax is nobody’s favorite thing, but there is no way around it. It must be paid for, so grit your teeth and pay for it. It’s shocking how many businesses fail at the final hurdle of tax owed. It means the managers have been robbing Peter to pay Paul, and that creates a stain on their reputation.
Get an Expert to Work For You
Successful businesspeople surround themselves with talented individuals, especially in areas that are not their forte. If finance is not your strong point, find someone who loves it, to whom it is second nature, and bring them on board.
Get the Best Finance Technology
Digital technology can do many things easily when they would be a chore for you. Look to what software solutionscould help you and invest in it. If you’ve got your financial wizard on board, even better: it canl make them even more efficient.
Find a Good Accountant
An accountant is more than a number-cruncher. A good one can come up with ideas you have never considered, because they are constantly thinking about the subject for various clients, not just you. Take advantage of that.
Be Objective
Try to think about your business as if it were someone else’s. See how you would change things. Analyze your own performance, identify weaknesses, and do something about them.
Stefano Mclaughlin
Author
Luqman Jackson
Reviewer
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