Small businesses continue to make up a majority of the businesses in the United States. However, most small businesses fail and have to shut their doors due to cash flow issues. One of the best ways to keep your small business running smoothly is by having your finances in order. Continue reading for expert finance tips for small business owners.
Operate On A Budget
Creating a budget for your business will keep your business operational, as long as you stick to the budget. A budget will allow you to separate the needs and wants of your business. To create a budget, you will start by analyzing your revenue, subtracting your fixed costs, calculating your variable expenses, checking any debt payments, and developing a profit and loss statement. Your profit and loss statement will allow you to get a real look at your finances. If you are consistently having losses, you will need to make a change.
Have Reserves Set Aside
An unexpected bill or setback could pop up at any time. It’s important to have savings set aside for emergencies in your business, similar to an emergency fund for your personal finances. If there are any seasonal fluctuations or predictable downturns, you should have savings set aside to carry your business through. The last thing you want to do is take money from your personal savings to help keep the business running. To prevent jeopardizing your personal finances, keep reserves on hand for your business.
Continue To Reinvest In Your Business
To continue to grow and scale your business, you will need to reinvest profits into your business. Reinvesting will allow you to reach your company’s long-term goals. When reinvesting profits, be sure that you are still taking care of all your expenses and putting them towards reserves. Reinventing can include hiring more employees, putting more money into marketing & advertising, and purchasing technology to make your business processes smoother.
Take Care Of Your Personal Finances
As a small business owner, you need to handle your business’s finances as well as your own. Being self-employed takes away the opportunity of an employer-sponsored 401(k) so you need to plan for your retirement yourself. You also need to be taking an income from your business and saving for your own rainy days with an emergency fund.
Handling personal finances is stressful enough, let alone handling your business’s finances too. Take the finances off your plate by utilizing a trusted and experienced financial advisor at Maven Bridge Capital. Let us handle your finances so you focus on what you do best - running your business. Schedule your consultation today.