Although managing a small firm may not be as complicated as operating a large firm, proper financial management is still crucial. Below are some excellent financial practices that you should not neglect if you wish to manage your money wisely.
Bear in mind that Time Is Money
New entrepreneurs commonly start by running the business alone. Accounting and bookkeeping, sales and marketing, product design, customer service and shipping are all the tasks that have to be done by an entrepreneur. As you develop, it is crucial to identify what kind of tasks you are good at, as well as which ones you are unable to complete well.
When you have sufficient income-generating work that you have to spend about 40 hours a week to complete them, consider outsourcing some of the tasks. You can employ an assistant to help you with sending emails and various other daily jobs, collaborate with an accounting firm in Johor Bahru to make sure that your books are neat and tidy, or outsource your social networking sites to draw the attention of more people regarding your business (Also see Situations Where Having the Right Accountant Can be Handy).
Come up with a Budget and Adjust as Needed
Producing a budget is at the top of your to-do list if you want to handle the finances of your company. Most of the small entrepreneurs do not create a budget for their costs as it is tough to approximate how much you would spend when you are still a newbie in the business world when there are no prior records for your reference.
It is alright if your real numbers may not be accurate as it is normal even for established firms. Through the process of budgeting, you will be more thoughtful about ways you are expending your income, and this helps you to have a clear insight about ways you can improve your business in the upcoming years (Also see Tips on How to Sort Out Your Chaotic Finances).
Manage Your Cash Flow
When you start your business, you must take note of all profit and expenditures from the first day, even if most of them have no amounts.
Managing the finances of your company is a task that you may easily neglect since you pay more attention to piles of other things you have to complete to make your business a success. However, keeping your accounting well-managed is hugely significant.
You’ll be glad that you have made an effort to manage your finances, including the petty cash (Also see The Importance of a Petty Cash Book), and be prepared when tax time comes and when your business develops until you have to appoint someone else to complete the daily accounting chores.
Set Up an Emergency Fund
Not only every individual should have their emergency funds for private finances. Also, entrepreneurs should possess one. There are chances where your firm may face an unpredicted expenditure or a period that does not meet your expectations. Thus, planning for this cash crisis are compulsory (Also see Are You Filling Your Self-Employed Income on Your Own?).
Without an emergency fund, something as little as a late-paying customer or a worn-out computer can have a severe impact on your business. You may be unable to cover payroll or settle important bills.