3 Tips On Managing Finances For Small Businesses

Small business owners and even solo entrepreneurs work hard to keep their business afloat. And yet, so many of them fail despite having innovative ideas, potential and the smarts. Where, then, does the problem lie? It is estimated that over 85 percent of small businesses die off due to a lack of financial management and bookkeeping.

Working On Finances

Finance is the backbone of every company. No matter how great an idea may be or how business-savvy an entrepreneur is, improper handling of money will not let a business survive for long. Hiring an accounting firm to churn out financial statements annually is not the solution for everyone either. Many businesses simply drain their limited resources like this.
The best way for a small business to handle money flow is by applying good financing skills. An empowered manager or business owner who can work with accountants and financiers rather than depend on them is the one who sees his/her business flourish. Pick up on these tips on better management of finances to see your business grow.

1. Be Responsible

The manager of a business needs to acknowledge that dealing with finances is part of his job. Accountant teams are there to assist and undertake all the money crunching, but the business owner must play the main role. From the initial mapping stage to the wrapping up of monthly accounts, owners must oversee everything and understand which way things lie.

Learning new things is something even a seasoned manager should never shy away from. It is well worth it to sit down with the accountants and go over all their reports to understand what each table, chart and set of figures mean. This way you will be able to judge your company’s financial health better.

2. Creating Strategies

Even before you start playing with numbers, you will be creating strategies and plans to economically lead your business to success. Paying special attention to the future when it comes to finances will also pay off in a similar way. Keeping up-to-date with finance systems in your business will make it easier to predict rises and dips in the money flow.
Good financial planning is a key aspect of a strong business. When you keep your sight set on the future, you will know how to distribute your money throughout your business. Rushing into projects without having prior knowledge each step of the way can only lead to failure.

3. Strong Financial Systems

Managing the assets of a business can be a complicated job. There are files on files of reports that seem tedious to go through. A good management system for all your financial records would involve taking the help of software that is built for managing finances of businesses. Purchasing such application packages would be a great investment for your company.

At the same time, keeping your finances in line with current taxation systems is also imperative for a healthy financial and credit record. Using updates accounting systems, such as Quickbooks can be a great help to the frazzled accountant.

Lastly, be smart when you build pricing models so that you are neither flying sky-high or dipping too low – healthy competition boosts businesses!

Brendan Egan is well-versed in financial management for entrepreneurs and small businesses. He gives advice on issues regarding productivity, credit card management, and money-saving.