Thousands of people start new businesses every year in the U.S. in pursuit of their entrepreneurial dreams. According to the latest census, there are 32.5 million small businesses, defined by the Small Business Administration as those that have fewer than 500 employees. But running a small business isn’t a “cakewalk.” There are many functions to manage, risks to deal with, time commitments, and mastering your small business’s finances.
What a Small Business Owner Needs to Do
To succeed, a small business owner must establish a healthy business culture. It is critical to hire the right people who will embrace the culture as well as contribute the right skills to the organization. It is also critical to offer quality products/services and to back those with excellent customer service so that repeat business will flourish. A company must successfully market its business because the philosophy of simply “open the doors and they will come” no longer works in today’s hyper-competitive business environment. Most companies today embrace technology as a key element of their marketing. Planning, and especially contingency planning, are important components of effective small business management.
The Importance of Finance in Business
Managing a small business’s finances is essentially managing the money of the business. That means ensuring that there is enough money to start a business, run a business, and expand a business. Small business’s finances are important because there must be enough money available to meet current operating expenses as well as to produce funds sufficient to yield a profit so that the business can continue to thrive and grow. Good financial conditions will enable a company to explore new products or services and new markets. That will facilitate the creation of more assets for the business. Good financial management will also help avoid and mitigate risks.
10 Things to Know About Your Small Business’s Finances
- Start by developing a smart business plan but don’t put it on a shelf to collect dust. It must be a dynamic document that guides your decisions and both organizational and financial actions.
- Be sure to separate your business and personal finances. That means having separate business and personal savings accounts, checking accounts, credit cards, and not co-mingling expenses. This will save many headaches at tax time.
- Don’t overlook your role in the company. Pay yourself a salary.
- Have well-developed billing and collection strategies and practices. You can’t pay expenses if you don’t collect what is due to the business. Too much cash tied up in uncollected bills can lead to severe cash flow problems.
- Focus on managing all expenditures.
- Establish and use good financial practices and get professional financial and accounting assistance to optimize your financial condition. Rigorously use the standard financial statements and monitor them regularly. Also, keep a sharp eye on ROI.
- Be sure to plan forward and set aside money as you plan for and invest in growth.
- Meet all tax payment deadlines and spread-out tax payments.
- Build and keep good business credit.
- Don’t be afraid of loans to get the funds that you need.
Get Expert Accounting and Financial Assistance
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting and financial assistance that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.