Evidently, there are many challenges when starting your own business, and money is usually one of the biggest.
Having enough capital to get your business started with the right tools and processes, and enough cash flow to keep it that way, is consistently the biggest reason people don’t get into business in the first place, or fail within the first 1-2 years after taking the leap. However, there are also small things you can do every day in your business to keep your finances on track and understood to ease the financial burden.
Below I’ve listed five easy practices for every small business owner to adopt on a daily basis to look after their bottom line more effectively.
Always Negotiate With Vendors
Often finding more bang for your buck comes as a result of deeper digging. When conducting purchases from a supplier, always try negotiating a better deal. Even though you need their services to keep your business going, there’s always more than one player in each market. Be bold and let any vendor know that they’re competing against another. Often you’re given a deal that was not apparent on the first contact.
Be aware of things like late payment penalties and trial periods when making a decision. There are times being given an extra month to pay can save you more than a 5% discount right away.
Pay On Time
As you do with your personal finances, it’s important all your bills are paid promptly. Late fees on loans and credit cards can dig you in a deep hole, but paying small late fees to vendors and on utilities bills adds up as well. The same of course goes for taxes, paying too late can land you in serious hot water!
Create reminders to ensure there are no business expenses that you miss. For young businesses especially, the profit/loss margins are really thin. Staying clear of late penalties can be the difference in ending the year in the red or in the black.
Avoid Mixing Business and Personal Accounts
There are hundreds of reasons not to mix business and personal accounts, most obvious being personal liability, jumbled accounting records and tax issues just to name a few. If things are getting tight you need to avoid the urge to secure your business funds with your personal finances. It becomes a big mess you’ll need to handle later on.
In my opinion, you need to create a business budget as well as a personal budget straight away. Adhering to these both strictly and separately so loans for your business credit don’t get used for your personal credit and vice versa. Your accountant will definitely thank you for not blurring the lines when it comes to balancing your books and paying your taxes!
Being Frugal is a Good Habit
You don’t have to turn yourself into Scrooge McDuck to save money on everyday expenses. However, make sure to follow through on things like in-rebate offers for office supplies and equipment. There is some great second-hand furniture and equipment out there, so make sure you upcycle wherever you can to save money on expenses and go green at the same time.
Take an Accounting Class
Being the owner of your business doesn’t automatically make you a finance expert. Although you’re still going to be making money-related decisions on behalf of your company. So, even if you use a bookkeeper or employ an accountant, you should have a basic business accounting understanding.
Take an introductory class either online or at your nearest college if needs be. It’s great to know how cash moves in and out of any business!
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