Friday, June 5, 2015, AM | Leave Comment
Starting and maintaining a small business is one of the hardest things that an entrepreneur can do. Many owners tend focus on their financial situation and this is very much needed.
In startups, small businesses are particularly at risk for costly errors not seen until these errors impact finances.
One error can break a new business quickly. The business owner should seek as much financial advice in the days leading up to the grand opening as well as afterwards.
Ignorance is costly. Although business owners may be fully knowledgeable of their public offering of goods or services, most are not inherently adept at managing business finances due to lack of knowledge.
There are several things to consider regarding small business finances.
Daily Tracking of All Business Transactions
The moment the business makes that first sale, a trail of transactions begins.
The small business should keep a watchful eye on this first sale and view the direction it takes on a daily basis.
In terms of finances, this is often the first source of revenue and can have a wider ripple effect when managed properly.
It’s important for the small business owner to learn to place a revenue value on their relationship with each client from the outset. This defines where the larger sources of revenue exist and can be promoted.
A Comprehensive Accounting System
There are different styles of accounting software for different types of business.
For example, a small business that sells a variety of products may need only a standard accounting system. Consultants generally need a system that allows them to bill clients on an hourly basis with “extras” that may be involved in providing this service.
Make the best use of an accounting system and your merchant account with daily management reports that detail the precise spending and income from business transactions.
Part of business finances includes unforeseen risks. This can include equipment failure or serious illness of the owner/owners.
Such risk should be part of the small business financial picture. If you are owed a substantial amount then getting in contact with a merchant account collection agency can be the right way to go for the future of your business.
When small business owners take the time to create a budget, they should track how well they are maintaining their actual and projected budgets on a weekly basis.
Get advice from other owners on how they manage their budget. There isn’t one end-all-be-all budget scheme that works for everybody so make sure you find what works and stick with it.
Adhering to a 5-year Business Plan
Not having a vision for the future can seriously hamper your business endeavor.
Small businesses who have implemented a 5-year business plan need to review it annually to determine their adherence to the plan and potentially adjust it.
Making a realistic and detailed 5-year plan can help give you the motivation to pursue your dreams.
Meghan Belnap is a freelance writer who enjoys spending time with her family. She also enjoys being in the outdoors and exploring new opportunities whenever they arise. Meghan also enjoys researching new topics that help to expand her horizons. You can often find her buried in a good book or out looking for an adventure. You can connect with her on Facebook and Twitter.