One of if not the most important aspects of being a good small business owner is to know how to manage money.
With that in mind, what kind of rating would you give yourself when it comes to managing your company’s money?
In the event you are not too good at this aspect of running a business, you could be out of business before you know it.
What Can You Do for Better Finances?
In reviewing your financial health, here are a few pointers to keep in the back of your mind:
1. Look at trends – As you’d follow good trends that impact your business, the same goes for negative ones. For example, if sales and revenue have been trending downward for a while now, can you put your finger on why this is? Do your best to get to the bottom of why sales have been sluggish for a period of time now. While it may be a slowdown in the industry you are in, it could be something more. That is specifically related to your business and efforts to sell and grow revenue. The goal should always be to see sales grow year after year and not the exact opposite.
2. Make the most of opportunities – There is no doubt you want to make the most of each opportunity to come your way. Being able to do that means you are up to speed on all financial aspects of your business. Besides the critical importance of making money, how you go about it is key. So, make sure you are on top of things such as ASC 606 revenue recognition. That means you are compliant with your revenue contracts. You are also properly tracking and recording commissions. The failure to do so can have a negative financial impact on all you have worked for. Also make it a point to know you are getting the best deals possible. Since you likely work with vendors to supply you with goods and services, are you getting the best prices? Review those contracts on a regular basis to be sure you are not paying too much. Last, review things like what you pay for office space and more. The goal is to spend within your means and find deals whenever possible.
3. Take advantage of opportunities – Last, there are few folks that look forward to tax season. That said you want to take advantage of any and all tax breaks you get as a small business owner. So, be sure to review all the deductions you in fact are eligible to get. Not doing so could be throwing money out the window. From office space you may use at home to utilities, expenses for work travel, get what you have coming to you.
Being a good money manager more times than not means you will stay in business for a longer period of time.
So, review those finances often and do all you can to keep your company’s financial health above average.