Why only ‘small businesses?’
‘Isn’t money management essential in any business, irrespective of size and type?’
These can be your first questions upon reading the heading. So I thought of answering these first.
Yes, money management is essential, mandatory and also inevitable for every business, irrespective of size and type. But then, why did I choose to talk about small businesses only, here? That’s because small businesses can be just starting out and therefore small. And in a starting out business, when everything is in a very nascent stage, having a good grip on money matters is a step that directs towards growth.
Again, a small business can be just an extension of a personal hobby, and therefore there can be high chances of mixing up of business and personal finances which can eventually lead to a permanent halt in the business.
In an organization, that is already large, there are people and systems already in place to manage, handle and execute finance in effective ways. Therefore a tip for a large business can be vastly different from the one a small or starting out business may find useful.
Tips to manage finance in small businesses
So, let’s jump on to the point and see how we can manage finances more effectively in a small business.
Segregate business and personal finance- This is so very important a point and how I realized its importance in my own life being a hobby soaper and putting out a small business structure to sell my handmade creations. Often there was no segregation of the personal finances from the business one and that lead to buying raw materials from personal money and using the business income for personal expenses. Sounds all rumpled, isn’t it? Well, it was. And, the only way I saw to get my life out of these messes is to close down the business. Lesson well learned. So, the point is to not let this happen to your business. Get a grip and use business money for extending the business further and keep personal finance completely separate. Even if you need to use personal money to go into your business at some point (after all it is a small business), mark that as a capital investment in the business.
Keep proper tracking- Keeping proper track of income and expenses of the business is the one point that cannot be enough emphasized, may how much I emphasize. Going over in your expenditure than what your business is earning is the sureshot path to loss and can be a failure even. Being a small business can also mean that you have smaller sources of capital investments. Therefore to hold what you already have and increase thereupon without compromising on the quality and ethics of your business is a fine balance and to achieve the same, transparency in income and expenditure is the ultimate requirement. Keeping things neat and minutely tracking of every income and expense will ensure financial transparency in your business as well as help out in accounts and auditing processes.
Invest in a cloud-based finance management solution– You may think that you are a small business, why do you need a management solution in place. Well, that is because, though you are small today, you are obviously aiming to grow, every business looks towards growth, isn’t it? And the business growth will happen only if you know how to spend your money effectively and in proper resources. A finance management solution will keep your data safe, accessible from any place, any time, maintain a proper track of money in and out, keep your books of accounts updated for the smooth audit process, provides an analytical report on your money management, and also aid in strategic planning for your business & many more. You can read more on the reasons for using a financial management software here.
Veza Money offers a complete financial management solution that aids a business right from the order management through billing, taxation and even strategic planning. A cloud-based solution, Veza Money provides utmost assurance in terms of your data security and a headache-free finance management solution.