Research conducted by Goldman Sachs revealed that over 70% of small business owners are worried about their finances. Managing business finances is one of the most stressful aspects of running a company and cash flow issues are among the most common causes of business failure. In this guide, we’ll share some helpful tips to make managing your money less stressful.
Embrace budgeting
The first step to take when embarking upon a mission to simplify company finances and take the stress out of money management is to embrace budgeting. Drawing up a regular budget is a simple, effective way to take control of your money, plan ahead and reduce financial risks. At the start of the month or quarter, use a budgeting app or a spreadsheet to create a detailed, comprehensive and accurate budget. Note down your regular income and recurrent outgoings and add one-off expenses or earnings for the month ahead. Calculate how much you can afford to spend, save or use to pay bills or clear debts. Use your budget to set limits and allocate funds to different areas, for example, wages, bonuses, new technology, research or extra stock. Update your budget as you go, using accurate figures.
Make use of financial software and tools
Running a business requires a diverse set of skills and the ability to juggle several balls simultaneously. Using financial tools and software is one of the best ways to save time and effort, boost efficiency and reduce the risk of making mistakes when accounting, bookkeeping, sending invoices, processing payments and calculating taxes. There’s a huge range of online tools, apps and programs you can use to simplify business accounting, automate repetitive tasks and track your income and outgoings. Research tools online, get advice from experts and fellow business owners and sign up for free trials and demos. Read reviews and compare prices and packages.
Get help with business taxes
Taxes can be a major headache for business owners, especially those who don’t have extensive experience in accounting. Paying your taxes is easy when you’re employed. If you launch a business, there are different rules and responsibilities. If you employ people or run a company as a partnership or corporation, you’ll need an EIN, also known as a Tax ID. It’s a good idea to look for a filing service for a federal EIN if you’re short on time, you’re inexperienced in business finances, or you’re unsure what to do. Using services can save time and stress and free up valuable hours for core business activities. Search for reputable, professional services and don’t hesitate to seek expert help if you have queries about business taxes or you’re unsure whether you’ve completed your return or calculated your tax bill correctly.
Consider outsourcing
It’s understandable to think of outsourcing as something large, established corporations do, but outsourcing is increasingly popular among new businesses and small companies. Outsourcing involves hiring external providers and third parties. It offers an alternative to hiring employees and provides access to skills and services you may not have in-house. In many cases, outsourcing is a cost-effective solution for businesses. Activities that business owners commonly outsource include IT support, logistics and shipping, cleaning, marketing and accounting. Working with an accountancy firm can help you get your books in order and ensure you comply with financial regulations and tax rules while freeing up time for your team to focus on critical business activities. If you are considering outsourcing, research agencies carefully, look for reputable companies and compare quotes before you decide who to hire.
Prioritize clear communication
Cash flow problems are a common obstacle for business owners. It may not always be possible to avoid cash flow issues, but prioritizing clear communication can lower risks. As a company owner, it’s hugely beneficial to communicate effectively with customers and clients from day one. Set clear deadlines, issue payment reminders and make it as quick and easy as possible for clients to pay. Outstanding invoices can be costly for small businesses and start-ups. Send invoices promptly after purchase, include instructions and automate reminders. Try to avoid getting into situations where clients owe you money and you’re still allowing them to place orders. You may be open to negotiating with loyal customers if they have temporary cash flow troubles, but this shouldn’t be a regular occurrence.
Managing your business finances can be stressful. If you run a company, there are ways to avoid dilemmas, lower risks and take the stress out of accounting. Examples include seeking expert advice, using software and online tools, learning about rules and regulations, making use of professional services, outsourcing financial activities and communicating clearly with clients and customers.