Small and medium-sized businesses, popularly known as SMEs, are the backbone of any economy. Their owners have mastered the art of creating and selling for a quick profit. However, one of the biggest challenges that small business owners face in their daily operations is money management. Unlike big enterprises that have employed financial professionals and accountants, small business operation is usually a ‘one-man show’. As a result, the owner may become too engrossed with creating and selling without taking time to look at the cash flow within the business.
Money management for small businesses is just as vital as any other business; it defines your business direction and prospects. Money management, in this case, will include aspects like goal setting, income, and expense tracking, and overall budgeting. Through proper money management, small businesses can easily determine how the business is fairing and can easily note when there is negative cash flow. Based on this, Adtrack will be talking about some of the best money management practices that small and medium enterprises can apply to improve their business prospects.
A budget is the backbone of any business. Without it, your business will lack direction and form. As a small business owner, you have the mandate to list your expenses, expected profits, and overall income. Usually, one can plan their budget on a yearly basis. However, this can be broken down into quarterly, monthly, and even weekly periods based on your business model and industry. Managing your business cash advances should also be part of your budgeting regime.
By creating a clear budget, you get a better overview of how your business will potentially turn out to be. For instance, a good budget can let you now at what point in your business some extra cash for business expansion will be available. On the other hand, it will also indicate seasons or periods when income is low and thus enable you to adjust accordingly.
Focus on accounts receivable
Making a sale is the ultimate goal for any business. However, when starting a business keep in mind that there is more to business than just making a sale; you ought to ensure that you actually collect the money associated with the sale. One of the biggest mistakes small business owners make is determining the success of their business by only looking at the transactions made. Sales is the ultimate indicator of good business, alright, but do you take your time to ensure that all the income made on these sales is collected?
As a small business owner, your priority should be on tracking your accounts receivable and ensuring every coin is collected as soon as possible. The best thing about tracking accounts receivable is that you do not necessarily need an extra human resource. With technology, several tracking tools are now at your disposal to help you with the same.
Be punctual on settling bills
Just the same way you would not want your accountant receivable to delay, you also have to reciprocate by ensuring that you pay all your bills on time. This is especially so in regard to recurring payments. You may see the need to create a spreadsheet, chart, or any other tracking method to ensure your bill payment is always on time. Some of the notable bills worth watching may include loans, rent, and other charges for services like phones and the internet. By paying your bills on time, this gives you the peace of mind to concentrate on the business without worrying about your essential services being cut off or incurring extra charges for late payment.
Manage employee costs
Small business owners always have to contend with employee costs. You want to keep the best workforce, but at the same time, you are looking at keeping the costs associated with the same at the lowest. You can easily do this by putting in place an efficient time and attendance tracking tool. This will help ensure that you reduce cases of overpayment and that every employee is paid their dues on time.
Use Effective Marketing Tools
Using Marketing tools for your business will help you track your goals. This will not only keep all the digital processes on pulse but will also give you a good knowledge of your money management.
The best tools and platforms for businesses are the ones that provide you with traffic and ranking metrics so that you can see where your customers are coming from, how much time they spend on your business site, what services they are interested in and etc. Lead distribution and generation software like Adrack are also must in managing a modern business, as they help you generate and distribute your leads on one platform.
Save for a rainy day
Business can sometimes be unpredictable. So as a small business owner, keep this in mind and ensure that you always have some extra cash to help cushion you in case the business doesn’t go as planned. These extra funds will help you go through this phase, especially so in settling recurring expenses like salaries and rent. Managing your marketing strategies during a recession is also an important part of getting through tough times. This helps keep the business running before everything normalises back.
Whether you are a veteran or simply starting out, keeping track of expenses and incomes to your small business will determine your success or lack thereof. Always stay on top of things by ensuring that every penny is accounted for to avoid negative cash flow. Take the necessary measures to cut costs and increase revenue. As a rule of thumb, your account books should always be up to date. This creates a better chance for business expansion.