As many small business owners may admit, finances may not be their strong suit. Entrepreneurs tend to be “big picture” people that tackle big problems and develop big visions. “Big picture” people, however, typically don’t like to stare at financial spreadsheets, while spending hours entering in expenses by hand.
However, finances are just something you have to do, especially for a small business. So for those of you that want to make you finances a little more tolerable, here are 4 finance tips for small business owners.
4 finance tips for small business owners.
1. Don’t Procrastinate
One of the biggest mistakes new entrepreneurs make is that they procrastinate when it comes to their bookkeeping. If you aren’t a financially-minded entrepreneur, programs such as QuickBooks can make small-business accounting seem unmanageable, especially if you only need to send out a few invoices and track a few expenses.
Putting off your accounting work doesn’t make it go away. It just gets bigger and leads to an overwhelming mess later on. The bigger the mess, the more you’re likely to procrastinate.
Fortunately, though, small-business bookkeeping is actually very simple. It gets easier by breaking everything down into small categories, such as:
- Categorizing Expenses
- Paying Employees
- Sending Invoices
Everything becomes much more manageable, and procrastination lessens as a result.
2. Understand your Seasonal Cash Flow
Another cautionary tip to new entrepreneurs is to understand seasonal cash flow to know your sales cycles.
If you’re a B2C retailer that sells $20 items, your sales cycle is likely fast enough where having a cash buffer on hand is less of a concern. If you’re a B2B company whose sales cycles last months or years, having extra capital in the bank is definitely a best practice.
3. Focus on your Core Strengths
Instead of focusing on creating all new products or services from scratch, it’s far more cost-effective to work with existing tools and ideas that they’ve already perfected. As new entrepreneurs, you may think that you need to create everything from scratch, but the problem with this approach is that it wastes your time.
It might save you a few pennies at the end of the day, but the cash you’ll save is small compared to what it cost you to take a key employee away from those activities that drive revenue for your small business.
4. An 80 hour Work Week is Not Profitable
If you have to work 80 hours a week to keep your business afloat, you’re not profitable. Too many entrepreneurs blow through the earliest stages of their company's growth by putting all their time and energy into their businesses at the expense of their health and relationships. While that may be fine for short periods, it’s simply not sustainable.
If your company is only profitable because you’re working yourself to the bone, your numbers will take a major turn once you scale back your workload, if you haven’t already collapsed from exhaustion first.
To maximize profitability for your business, download our Small Business Profitability Checklist today!