Money Management Tips
As a small business owner myself, I know all the pains and frustrations that small businesses have with money and cash flow. We all need the cash to grow our businesses, pay expenses and hire new staff. There are so many things that need to be done, and you need to make one decision after another. It is never an easy process.
So, we have put together some ideas about how to manage your cash flow.
What is your cost of living?
The question is what is your real cost of living from month to month. It is important that you work out your personal costs and your business costs. You should know what you need to live comfortably enough to feel motivated through your day to day work. You will need to create a budget for yourself, covering rent, food, utilities, other core personal expenses, but not forgetting an entertainment budget.
Knowing these costs of living will give you the minimum amount you need to pay yourself as a regular cost. When you get into entertainment, things you want and other luxuries, these are all items which will pull you away from your objectives, such as investing in your business and hiring new staff. So you will need to find the balance between personal life and business life.
One important consideration is to keep your personal and business expenses separate. Managing a budget off your business account is very difficult, and getting use to using your business card as your personal credit card will make it hard to track cash flow, hard to manage your budget and hard to manage your accounts at the end of the year.
Managing and Timing Expenses
Managing our expenses is a key part of your business, and buying products, stock and inventory are all key to your success. As part of managing expenses, you need to think about the long term impact. For example, sometimes it is better to pay more for stock if you can pay over time, as you’ll have more cash today to invest into other areas of the business, which will improve the overall cash flow for the future.
This is one key aspect to QLC unsecured lines of credit. They give you the access to funds over time, so you’re able to spread your expenses over a period of time, assisting you to manage and invest into other aspects of your business.
Human resources are the largest expense for almost every business. Before you start hiring people, make sure that you’re prepared both operationally (with the correct training, documentation and process) and in terms of the investment (how this employee will make you capital, how long until this capital starts showing up in your bank account).
Payment Plans with Suppliers
Quite often you will need to buy supplies, contract labor and other resources to get you started. In general, most will have their standard contracts, but a lot of time there is room for negotiations. They want to make their sales, and you need the best way to manage your funds.
See what terms you can get with your suppliers. Can you get a payment time period? Can you get staged payments?
A lot of suppliers are happy to work out a balanced payment method with you to maintain a win-win situation.
Keep money for the tax man
The reality of life is that the cash you get is not all yours. A significant proportion of that cash will always go to the taxman. This is just a reality of running a business, and it is important that you keep your payments ready for the year end. Be sure to have enough to cover medicare, income tax and any other tax elements due.
Avoid using these fund for investing in your business, even if it is tempting to do so, as this will avoid difficult situations and potentially criminal liabilities.
These are just a few important tips for managing your funds. Add them to your tool kit for your business, and keep growing your ability to make efficient and smart investments.