Starting a new business comes with a lot of sacrifices, and doing well in it isn’t a walk in the park at all, it does require certain measures. One of these key measures is planned financial management, which is part of the factors that crumble most businesses abruptly when you least expected. And It is not even only about small businesses alone, it also affects financially enterprises and governments.
Many would not forget in a hurry how a lot of state governments plunged themselves into serious financial debts due to poor financial management planning, and the economic recession dealt a big blow on the nation’s purse and evidently affected state subventions. Some states have spent more on cosmetics projects and some got themselves into a big mess through excessive borrowing of loans.
So, we can see how important it is for every business owner to place a premium on Financial Management and lots more. Well, here are 5 tips or advises that I feel can help small businesses to manage their money effectively.
Get a planned Budget:
Ever wondered why investors ask for a business plan and years of possible financial demands before they grant you loans? Well, it is an opportunity to ensure that you have a good business plan that is financially realistic and will be modest to support.
Many a time, small businesses get it wrong by spending unnecessarily at business birth or take up, and before they realise how badly they have spent, lots of money have gone down the drain. To succeed greatly, plan everything in details, don’t exaggerate or forecast badly.
Take for example a woman going to the market and she had taken time to write down what and what to buy and had inquired about the possible cost per item. She would save herself of two things: time and resources wastage. This is because she knows exactly what she wants, what it will cost, and where to get it.
This wisdom can be borrowed into businesses. You want to travel to buy your products, get a budget. You want to do a business expansion, plan for everything from the beginning and do it realistically by doing your due diligent findings and adjust carefully if needed. It pays this way than going into it blindly. It hurts most times when we realise things are not going as expected business-wise. This can be avoided.
Take Calculated Business Risks:
It is true that the ability to take risks is one of the first biggest attributes that every business person must possess. But, the risk in an actual sense must be well calculated.
A good business person doesn’t gamble. It is better calculated on chances or probability. Here, you factor in many things to be sure of what you are going into truly worth it.
The probability of doing well in a seasonal business like selling umbrella, raincoat, sweater, rubber shoe and lots more is higher during the raining than the dry season. And If you must sell these kinds of stuff the dry season because you feel people still use an umbrella to shiled themselves from the sun, then you must know that you are taking a dicey risk.
This would avoid sales drought and evidently ensure the business isn’t grounded for some time. If you want to succeed greatly with your start up, ensure the business risks will truly worth. T
Have a financial Record:
There are lots of financial software available now to help you manage your business accounts. Google will help here. It is not a right thing to do, to mix personal expenses and income with that of the business. Many times, you would have spent beyond necessary out of the business capital, thinking you are spending your profits.
Every business today, particularly trading needs bookkeeping to separate facts from fads.
An uncle once told me that he restocks his wife’s provision store yearly and they sometimes don’t know how the stock goes out without commensurate profits.
Then I asked, do you take records? How do you spend the business money? And he honestly said that they don’t, and the business sometimes helps for house upkeep and sometimes for their ongoing housing project.
And I replied, “that’s the problem”. You can’t be using your business little gain to build a house and you expect the stock to keep growing. It won’t.
This is peculiar to many businesses, with some taking their business money to other things without prior planning or alternative business support. Business owners should be wary of this.
Run a slim & cost-effective operation at the start:
One other good thing to introduce as your business starting stage is to develop an operational plan that allows you to save cost while doing it yourself.
Yes, you need smooth running, but sacrifice more time and not hastily hiring new paid assistants whose salary can drain the business even when you haven’t been making gains, is another way to gauge your business finances.
I once read a post where a University lecturer who got suspended through university strike actions, took to using his bus for commercial purpose. He needed a bus conductor, and rather than hiring one, turned his jobless wife to help. It sounds funny and strange but it is a good way to save cost.
Having other sources of Income:
While running your own startup can be exciting, it can also create challenges, especially when it comes to managing small business finances. So, it is always good sometimes not to put all your business eggs in one basket, or simply get into other possible ways to financially support the business. You have a business, it won’t be bad adding training services into it if time permits or involving in skilled services. All of these ensure your business finances aren’t stressed.
Do you find any of these tips helpful? Share your thoughts.