Running a business involves wearing several hats. From pushing sales and raising brand awareness to being front of house, delivering services, and accounting, being a company owner requires a diverse skill set. Managing money can be complex, but there are ways to simplify this task. In this comprehensive guide, we’ll outline some effective strategies to help you save time and effort, maximize efficiency and reap the rewards of well-organized accounts.
Reader's Roadmap
Separating personal and business finances
For small businesses and solo ventures, it may be tempting to use personal accounts to manage business finances. This setup may work for some entrepreneurs, but it can be counterproductive. Rather than saving time and making accounting easier, combining personal and commercial finances can cause headaches. It will take longer to budget and calculate expenses and taxes, and it’ll be more difficult to track spending and figure out revenues, outgoings and profits. Setting up a separate account for your business can solve these problems. It’s beneficial to research different accounts and financial organizations before deciding which account to open and which provider to choose. Some banks may offer better terms than competitors while others may provide introductory offers or incentives to attract new clients. You can compare online before applying.
Calculating expenses and outgoings
Running a company involves incurring expenses. To stay afloat and reduce the risk of cash flow issues and spiraling debts, it’s essential to calculate outgoings accurately from day one. Every company owner should be aware of initial start-up costs, running costs and expenses related to growth or expansion. Using accurate, up-to-date data can help you make well-informed decisions, budget effectively and identify costs you could reduce or eliminate altogether.
There are several ways to calculate expenses, including traditional accounting methods, such as entering data into spreadsheets, and using cutting-edge apps, online tools and software, including expense trackers.
If you’re on a tight budget, or your income has dropped or plateaued while costs have increased, reducing expenses can help you stay in the black. Use your budget, cost-tracking software and accounting tools to help you identify areas where it’s possible to decrease spending. Perhaps you could negotiate a better deal with your suppliers or switch to a different service provider to get a better deal. Maybe you could cap employee expenses or consider giving up an office lease at the end of the contract and switching to a hybrid or remote working model, for example.
Making use of helpful resources
Setting up a business is exciting, but it can be a daunting process, which can throw up unexpected challenges and obstacles. Often, in TV shows and movies, it seems glamorous, but it’s hard work.
One of the most difficult jobs for many entrepreneurs is managing business finances. Making use of resources can help you identify effective ways to organize your accounts, provide information about great tools and software and shine a light on how other businesses function and cope with financial hurdles or setbacks. Read interviews with respected business owners and financial experts and keep abreast of news and current affairs. Look for articles that are relevant to your industry or business. For companies that operate fleets, blog posts like Fleet Utilization: Definition, Importance, And Metrics by CoastPay offer insights into how fleet utilization works and how you can use innovative tools to lower costs, streamline fleet management and save time. Online libraries and dedicated business blogs can also provide access to helpful links and reviews if you’re searching for specific types of tools or looking for solutions for pain points.
Creating a budget
This is one of the simplest but most effective ways to take the stress out of managing business funds and reduce the risk of cash flow problems. Creating a budget involves recording your income, regular expenses and one-off outgoings within the specified period. Budgeting enables you to track spending, establish spending limits, determine how to allocate funds appropriately and plan ahead. In addition, you can use your budget to help you make critical financial decisions.
How you budget often comes down to personal preference. For small businesses, some entrepreneurs prefer to use conventional methods, such as pen and paper and spreadsheets. For larger companies or those who like to embrace modern technology and tools, there are some ingenious budgeting apps and software programs available. Research online and compare features and prices.
When you budget, it’s wise to follow some golden rules. These include using accurate figures where possible, updating your budget regularly and rounding up instead of down when using estimates.
Outsourcing
Outsourcing is increasingly popular. Data shows that almost 40% of companies now outsource at least one task. Bookkeeping, payroll services and accounting are among the most commonly outsourced processes. If you don’t have the time or expertise to manage your money as a solopreneur or small business owner, or you don’t have an accounts department or employees with the relevant skills and expertise, outsourcing could benefit your business. Outsourcing involves working with a third party. This may include an accountancy firm or freelance accountants or bookkeepers, for example.
There are many advantages of outsourcing, but it’s crucial to take steps to ensure it benefits your business. One of the most important decisions is who to hire. Take your time researching firms and comparing quotes and services. Look for reputable companies or individuals with a proven track record. View case studies and examples of work, read verified client testimonials and reviews and search for businesses that offer tailored, customized services.
Outsourcing can free up time for you and your team, take away the stress of managing money and provide access to scalable solutions delivered by trained, skilled individuals. It could also be cost-effective if you’re thinking about hiring an accountant or setting up an accounts team.
Money management can be a headache for business owners. Accountancy tasks can be complex and time-consuming. Simplifying processes can reduce stress, save you time and effort and help you maximize profits and lower risks. Key steps include separating your personal and business finances, calculating your outgoings and expenses, creating a budget, and taking advantage of useful resources. In addition, you may find outsourcing works for your business, offering an alternative to hiring that is efficient, speedy and cost-effective.