How To Manage Small Business Finances
Proper money management in business is key to the success and longevity of your business. Many business owners start a business through the passion that they feel about offering their product or service to their clients, but they don’t know how to manage their business finances. Their focus is on messaging, branding, and marketing to get those sales coming in. They need to let people know that they exist so that they can serve them. So much money goes into building their brand and marketing that when the money starts coming in, they focus on the growth of their business without a plan. Knowing how to manage small business finances is often overlooked.
Not much attention is paid to the backend of the business, the business finances. This is literally the foundation to which you build and grow your business, but you don’t hear a lot of experts speaking to this in the overcrowded online world. It leaves business owners feeling lost and misguided and wondering how their businesses are really doing.
What are business finances?
Business finances are the money management side of your business. It’s about the bookkeeping and accounting of your business, managing the cash flow and loans for your business, optimizing the profitability of your business, and ensuring you pay the taxes due to the government.
Financial management can feel overwhelming to business owners because chances are they’ve never been taught how to manage the money in their business. But rest assured, there is help there. When you work with a professional who coaches and guides you through the process and teaches you how to make your business as profitable as you can make it, that eases the overwhelm and creates financial confidence.
Why are business finances important?
Cash is the lifeline of the business. You need cash coming in to meet the financial obligations going out. Without cash to pay your bills, the business will cease to exist. Cash is monitored through financial reports and this all ties into cash management.
Many business owners feel stress around their finances, but when you know how to manage the money in your business and see how profitable your business is, those feelings of overwhelm and fear will be quickly replaced by financial confidence. You’ll make smart business decisions that will result in profit when you know your business numbers.
Knowing your business numbers allows you to understand how profit is generated in your business.
How to manage your business finances
You don’t need to be an accountant to manage your business finances. In fact, depending on the size of your business you will either have a bookkeeper or an accounting team to take care of the daily accounting requirements.
But you, as a business owner, need a high-level understanding of your business finances and how to manage them from a higher level.
Steps to take in managing your small business finances
I have created the Cash Confident Framework which outlines the five steps you need to take as a business owner to understand your business finances.
The 5 steps in the Cash Confident Framework include:
1. Money Mindset
Business owners need to be clear of money mindset issues that may be blocking them from financial success.
2. Financial Reports
You need to know how to read your financial reports and interpret the results. Financial reports need to be generated for your business at a minimum of a monthly basis and you need to read them.
3. A Business Financial Plan
Having a financial plan for your business allows you to create a roadmap for your business and forecast where you’d like to be 12 months from now. Financial plans give businesses goals and direction.
4. Monitoring Your Progress
You need to measure your progress against your goals each month so you can assess how you are doing. If you need to make adjustments and course correct, you’ll know where to do it when you monitor your performance.
5. Cash Management Systems
Having a cash management system in place helps protect your business from any cash flow issues. You can create plans to ensure you do not run out of cash.
Download your free 5-Step Roadmap to Biz Finance Freedom to get your own personal copy.
Resources available to help manage your small business finances
The Business Society Course Suite is available for business owners. I have designed this course to help business owners not only manage the money in their business, but your personal finances as well.
For more information on The Business Society Course Suite, click here.
Check out The Business Society Course Suite package to learn how to manage your business finances!