4 Finance Management Tips for Small Business Owners

Meghan Belnap

May 07, 2015


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Managing finances for a small business may be easy when you are the owner. This can, however, become a challenge as the business develops and you get a larger clientele. As the owner of as small business, it is important to have a clear comprehension of your business’s financial condition so as to improve your chances of acquiring success. It is therefore important for a small business owner to learn how to manage the finances properly. To help you do that, four main finance management tips have been discussed below.

Budget Your Spending

To run a small business successfully, a proprietor needs to have knowledge on the amount of money he or she needs so as to break even and the amount of money he or she has to spend to run the business daily. To achieve this, one has to separate the budget into 4 classes: fixed expenses; pay-check allowance; variable expenses; and the prospective income. This will lead to financial discipline as one will be able to identify and have a balance between needs and wants.

Separate Business Funds from Personal Funds

It is necessary to separate these two types of funds. Separating these funds will make you be more organized, manage your taxes in an easy manner, and enable you to keep track of and record all your financial records. It is also important to open a separate high risk merchant account for your business expenses and another one for business checking and savings accounts. This will also help you manage your finances appropriately. Having a business credit card that has a fixed credit limit will help you be flexible and give you control on how plan for the cash in-flows so as to meet the cash out-flows.

Use Financial Management Software

There are available software choices that can help a small business owner manage their finances well. Such software enable a person to track their finances correctly, file taxes, make invoices, manage the budget, produce receipts, keep information on clients, and even build a person’s financial literacy. There are some cloud-based financial management tools that you can use to get a clear picture of your financial condition. This saves you a lot of time which allows you to pay more attention to the growth of your business.

Know Your Cost of Living/Operating

This tip is very important for any person running a small business especially a start-up. One has to calculate the amount of money he or she will need to live on and withdraw it from the business income. Knowing your cost of living will enable you invest back the remaining profits into the business leading to growth of the business.

Management of funds in a small business can either to the success or failure of the business. It is therefore important for all business owners to learn proper financial management if they are to enjoy long-term success. A few helpful tips on financial management have been discussed above to enable you manage your funds appropriately.