Every business, big or small, startup or established is always concerned about one crucial thing, that’s managing their finances. Financial management is of paramount importance for breezing through the volatile economy and also to survive the competitive market today.
Small businesses need to be extra cautious while taking any major financial decisions. As a wrong move can affect the business badly and will be a setback to the progress of your business. Therefore, its essential that every small business entrepreneur should possess good finance management skills to turn their enterprise into a success story.
Every businessman is not adept at handling their finances, but that doesn’t mean that hope is lost. There are many financial apps that can integrated in the business process that can help them create a link between the CRM and accounts of their customers or clients, make a financial forecast and estimate. All this with a few mouse clicks.
Here we have put together a few simple tips on how to manage finances for a startup.
Educate yourself to read financial statements-
This is very important. A financial statement will give you the accurate picture about your business’s finances. It includes details such as cash flow statement, income statement, statement of shareholder’s equity and balance sheet. The income statement shows the revenue earned during a specific time period while the balance sheet shows the data related to firm’s assets, liabilities and shareholder’s equity.
Keep your personal and business finances separate-
Get yourself a business credit card. You should use this to make only business related purchases as you will be able to keep track of your business expenses. It’s better not to use this for your personal uses as things can get complicated and if you are a startup you don’t need that headache. Maintaining a separate bank and credit card accounts for your personal and business transactions will make it easier to keep track of the expenses.
Get the help of an expert-
Though many of us are tempted to save the money and do the accounting ourselves. However, it’s wise to call in a trusted financial professional who has an in depth knowledge of the tax laws in your state. He should be able to help you find relevant tax deductions and save you from paying unnecessary penalty.
Don’t hesitate to invest in cloud based accounting software-
Consider moving to cloud based business software. This will give real time data of your business transactions, allow you to store, update as well as keep track of the various transaction from anywhere at any anytime. This also more cost-effective as you don’t have to latest version each time, as the software updation is done by the cloud service provider.
Financial planning and forecasting-
Contemplate using financial planning and forecasting tools to develop a financial plan or framework to keep track of your financial transactions. Discuss with your senior executives and also get the help of your chief accountant to chart out a plan for you. Also be aware that financial models have to customized as there is no one-size fits all model. However, when the circumstances change, your financial plans and models also should change with time. Be realistic when you set your financial goals.
Monitor and measure financial performance-
You should keep an eye on the movement of your finances, whether it’s a large or small amounts. Analyze your firm’s financial performance to compare the present as well as past financial movements of your firm. This data will help you to project your future estimation of revenue, expenses and cash flow.
Owning a startup can be exciting but it can be nerve wracking if you don’t handle your finances well. Use the above mentioned tips to manage your finances. Also share your tips with us in the comments section.