25 Apr Financial Tips for Business Owners
No matter the industry you’re in, all business owners have one common goal and that’s to make money. If you allow yourself to be too distracted by your big idea or the excitement of making a sale, but don’t pay close attention to the finances, then there is a high possibility that your business won’t make it. The fact is that many business owners aren’t that financially savvy or are too busy with the day to day of their business that they don’t have a strategy. Yet by implementing a few simple best practices you can create a stronger financial picture.
Closely watching what is going out is one of the most effective tactics when managing the finances of your business. Start by negotiating with your regular vendors. We don’t always believe that we have options when it comes to vendors’ pricing, but many are willing to negotiate with you and every percentage counts when it comes to your spending. Having a conversation with your regular vendors once a year is a good practice. In addition, be sure that you are periodically checking regular expenses to be sure that they are still relevant and necessary to how you’re doing business. There are a lot of tools that business owners subscribe to for short term use, but if you aren’t paying attention they can continue to be deducted from your account even though you may no longer need them.
Manage your cash flow effectively
Managing cash flow is not intuitive; it’s not something you can simply calculate in your head because there are a lot of moving parts. The length of your sales cycle, amount of accounts receivables on your books, running costs and inventory are all moving data points that affect cash flow. So make a plan to stay on top of each of those points. For example, reduce your time to pay for accounts receivables by being consistent with reporting balances to clients and charge fees if they are late. And for inventory needs a point of sale system like Lightspeed will help you keep your inventory lean and reduce the amount of time you spend on ordering.
Set up a retirement account
Set up a retirement account and make sure you are investing in it. Even if it’s a small amount every month, this will provide valuable tax deductions and a sense of security that you are considering your own future, not just the future of your business. There are several options for small business owners, all with different compliance requirements. A Simplified Employee Pension Plan (SEP IRA), Savings Incentive Match Plan for Employees (SIMPLE IRA) and a Self-Employed 401K plan are the most common types.
Hiring a bookkeeper and using a simple accounting software will pay off huge in the long run. Not only will it save you hours of worry, but it will save you hours of frustration and accounting fees at tax time if someone is staying on top of income and expenses all year long. File all your receipts; if you are audited years from now, being able to provide a file of receipts will be pure gold for you. If you’re not super organized, simply stashing the receipts in a file marked by year is better than nothing! There’s no need to overthink it, just know where you’ve stored everything.
The tools that SilverEdge point of sale systems offer can help you manage your financial picture and we’d love to show you how! Contact your SilverEdge representative today for an appointment and we’ll help you make your business richer.