Every business is different and juggle with different amounts of finances. Some share a big portfolio of billions of dollars while others a few thousand. However, all businesses, from plumbing services to paper manufacturing share one common goal — to make a profit!
In order to maintain or maximize that profit, and give your business a fighting chance vis-a-vis a potentially more robust and established competition, you need to understand some basics of business finance management. The lifeblood of your business might come to depend on it, especially if you have newly set up shop and has little to no financial means of hiring professional aids like an accountant or business consultant.
– Automate your Cash Flow Management
The more finances you have at hand, the more you can invest into making your business grow.
Managing cash flow blindly, without a consistent and systematic method will consequently result in a catastrophic cascade of bad investments resulting from bad decisions. The trick in business, is replicating successful ideas and discarding bad ones. You will make mistakes, bad investments and so on However, limited by human memory, it is easy to lose track of those “winning decisions”.
A good business finance management software will help you keep sight of your investments, good or bad, so that you can go on and repeat only those decisions/investments that work for you and your business. They are also relatively cheap, considering the benefits they can bring to your business.
Alternatively, you can do it the old-fashioned way with a book record. It is daunting, and a little less effective than automated software, but still more efficient than relying on nothing but gut feelings and fuzzy memory.
Heck, before the advent of computers, this was the only way for anyone to keep track of anything, and it has proven to work for thousands of years, hasn’t it?
– Consolidate your Debt
Sooner or later, you will face a situation, or many situations where your clients fail to meet their end of the deal. Clients not paying in a timely manner can put a big ding on your financial portfolio. Don’t let it accumulate and make provisions on a weekly, monthly or yearly basis on how many clients you can allow not paying their due. If you go beyond this threshold, consolidate your debt immediately.
Your clients need to know that they have to pay you, based on the terms you establish. This is also important on a legal front. You can then delegate those payments into micro-tasks. For example, profits from a set number of clients go into payroll, another into buying advertising and so on Be on top of things by keeping track of every penny you spend in your business by using the methods we mentioned above.