Running a business is not exactly an easy thing for anyone to do, no matter how prepared they are or how much grit they possess. There are a lot of metaphorical balls to juggle, and if you drop even one of them, everything could end up going south. This is especially true when it comes to the financial balls you have to juggle as a business owner.
That being the case, let’s take a look at some of the most important financial things that business owners should always do if they want to succeed.
1. Keep Your Business and Personal Finances Seperate
Mixing business and personal finances is about as wise as using your email password as “password.” It’s a rookie move that can lead to tax headaches, accounting nightmares, and an auditor’s raised eyebrow—none of which are particularly fun, as anyone who has been following the Michael Kassan thing will know only too well. Keep separate accounts for your business and personal life to ensure that even if your business takes a nosedive, your personal finances won’t necessarily go down with the ship. Plus, it makes you look all professional and grown-up at the bank.
2. Embrace Budgeting
Budgeting might sound about as exciting as watching paint dry, but just like that trendy new diet, it can do wonders for your business’s health. A well-planned budget helps you keep track of where every dollar is sprinting off to, ensuring you’re not spending money you don’t have on things you don’t need (like that neon sign that says “OPEN” when you’re an online store).
3. Save for a Rainy Day, Because You’ll Get Wet
It’s not a question of if it will rain, but when. Having an emergency fund isn’t just good advice for your personal life; your business needs one too. This fund acts as a financial umbrella, keeping you dry when the unexpected happens, like a sudden downturn in sales or that time the office espresso machine decides to start its journey to the great coffee shop in the sky. Aim to sock away at least three to six months’ worth of operating expenses, and you’ll thank yourself later.
4. Get Intimate with Your Cash Flow
Understanding your cash flow is like knowing the exact water level in your scuba tank—it’s crucial, and ignoring it can lead to trouble. Regular cash flow forecasts help you anticipate problems before they arise, ensuring you have enough dough to cover your needs without scrambling to fill gaps. Remember, positive cash flow is the lifeline of your business; treat it with the respect it deserves, or risk the financial bends.
5. Master the Art of Invoicing – Promptly
Invoicing promptly and following up like a friendly stalker is key to maintaining healthy cash flow. Don’t let your invoices gather dust. Send them as soon as the job is done, and keep a vigilant eye on overdue payments. Because in business, cash is more than king; it’s the entire royal court.
6. Get to Grips with Tax Planning
Nobody loves tax season (except maybe accountants), but it doesn’t have to be your kryptonite. With some savvy planning, like taking advantage of tax deductions, credits, and writing off those bad debts, you can navigate tax seas like a seasoned captain. Consider working with a tax professional; they’re like the GPS in the labyrinth of tax laws and regulations.
7. Educate Yourself Continuously
The world of finance is always evolving, and staying in your comfort zone is akin to using a flip phone in the age of smartphones. Invest in your financial education. Read up on the latest trends, attend workshops, and maybe even take a course or two. The more you know, the better you can strategize and grow your business.
8. Use Technology to Your Advantage
Gone are the days of keeping receipts in shoeboxes (unless that’s your filing system, no judgment). Modern problems require modern solutions. Use financial software to streamline your processes, from accounting to payroll. It’s like having a virtual assistant who’s obsessively organized and works 24/7 without coffee breaks.
By following these financial must-dos, you can keep your business running smoother than you ever thought possible, and you can also be pretty confident that you will never see the IRS breathing down your neck because things aren’t as clear as they should be. Finances are a tough aspect to manage as a business owner, but they are also the omst vital aspect of running a successful business long term!
