So, you have started a home business! Excellent news and we hope that you find great success. It won’t be easy, of course. There are challenges ahead, and as an entrepreneur, you are going to have to meet them head-on. And some of these are directly attributed to your finances. For many an entrepreneur, this is one of the more difficult aspects of the day-to-day running of a business. But handle them you must, as you risk complications and possible business failure if you mismanage the money you have at your disposal.
With the above in mind, here are some tips that we hope you find useful.
Educate yourself on the financial aspects of your business. You may not be a whiz with numbers, but there are some simple things you can do to help yourself. Enrolling on a college course is one thing you could do, whether that’s taking specific courses on accounting, or registering yourself onto a course that covers all aspects of business management. You should also research articles online, particularly on any areas that you know you are weakest in. Here is an article on how to do your own taxes, for example, giving you advice on that bane on many a home business owner.
Outsource your accounting. If you don’t have time to manage this aspect of your business, then don’t risk any mistakes being made. Hire an accountant or a bookkeeper to help you keep your finances on track, as they will be able to support you with the more complicated parts of your accounting, such as those aforementioned taxes. You will then have more time to concentrate on the areas you are more proficient in within your business.
Use accountancy software. On your computer, smartphone, or tablet (or synced across all three), download one of these accountancy tools to help you manage your financial tasks. From sorting out your invoices to helping you check your expenditure, this software won’t eat into your budget and will save you valuable time during your working day.
Separate business from pleasure. Don’t have a shared account for your business and personal expenses. You will only end up getting into a muddle, and that can have a negative impact on both sides of your life. Open up a separate bank account for your business, shopping around until you get the best deal. By doing so, you will have a better grasp on the profits you are making, and a clearer understanding of your business expenditure.
Save money where possible. Running a business isn’t cheap! There are many drains on your finances, be that money on your marketing, paying for office supplies, and the necessary evil of your utility bills. It can take a while before you start seeing profits coming in, so at the very start of your business, you should look for ways to cut costs. This article on how to cut business costs will serve you and your business well.
Curb your spending. Part of cost-cutting is not spending at all! There are things you need for your business, and things you don’t, so forego any luxury items until you can comfortably afford to pay for them. Our guide to impulse spending may prove useful to you if you’re prone to spending more money than you should be. In all areas of your business, you need to let your head rule over your heart, no matter how tempted you are to splurge your cash!
Concentrate on paying off your debts. If you have taken out a loan to fund any part of your business, it is imperative you pay instalments in good time. You don’t want to get hit with charges for late-paying, as it can hit your finances hard, especially if you haven’t accounted for them. By paying off your loan quickly, you will then free up your finances to pay for areas more befitting of your money, whether it’s something essential, or one of those luxury items you may now have the spending power to purchase.
Set money aside each month. No matter how much money you are bringing in, you do need to set aside some of it in your reserves. Your savings will help you in times of emergency, such as when any of your technology breaks down, or you hit a dry spell within your business. Split your savings into two; part of it for those emergency periods, and part of it to pay for those more expensive items you are looking at for your business. You probably do this with your personal finances anyway, so it makes sense to operate the same sensibility within your business.
Chase up your invoices. Unfortunately, you may meet clients who are slow to pay you for the services you have provided them. An occasional delay can be expected, but if you have clients who are bigger offenders, then you may struggle to make ends meet when you’re trying to manage other aspects of your business. The last thing you want to do is appear rude, perhaps by making threats to the late-payer if they don’t pay up soon, but you do need the money. There are some tips in this article on how to deal with late payers. You should find the advice invaluable!
Stay on top of your finances. While you (hopefully) came up with a financial projection as part of your initial business plan, you should still return to this throughout the year. Depending on your profits and losses, you may need to make some adjustments. Track where your money is going, consider where savings need to be made, and look for ways to increase your profits if you aren’t meeting your goals. Especially when managing your finances without the aid of an accountant, you do need to monitor your financial health regularly to stay firmly in control.
Your home business can bring in a tidy profit, but care does need to be taken. Follow our advice and commit to further research when needed. By managing your finances well, you will enjoy the benefits that a home business can bring. We wish you every success.