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Money Management 101 for Small Businesses

In this modern world of technological advancements and computational delight, it may come as a surprise that small businesses are still able to thrive in spite of corporate ubiquity. It is a battle for survival, a quest for legend upon a precipice, and one must never go off into battle without adequate weapons and armor.

For there are villages to pillage, and spoils to obtain. These spoils cannot be accessed through means of faulty management, and thus have many burgeoning companies and their checkbook IRA met their end because of them. There are several components to success in the small business sector, and can be read from their distilled essence in the list below.

1. Keep Business Expenses Separate From Personal Expenses

As a small business owner, this is one of the most common mistakes one could make. These business expenses must be firmly relegated off to the side, so as not to be accused of tax fraud. A separate account for business expenses will do wonders in the long run.

2. Pay Bills On Time, Religiously

When one becomes the owner of a small business, there is no gong that suddenly resets the responsibilities of the individual. Bills will still need to be paid, for purposes of both personal credit and business credit. A good standing in the community will go a long way, and vendors are encouraged to stay on top of their monthly payments as they arrive.

3. Don’t Sign a Contract Until Negotiations are Done

This point is especially valid if one is a newly christened owner of a small business. All is not well in the corporate world, and parties that may initially seem like good investors or allies may turn out to be inauthentic duds. Take paperwork seriously or suffer the consequences.

4. Set a Breakeven Point and Stick to It

This will require a certain amount of disciplined from the more enterprising entrepreneurs in the swathes of would-be business hopefuls. Whether it is a period of several days or several quarters or several years, it is of the utmost importance that the company is working with a set date in mind. If the company has not broken even by the time this date arrives, it may be time to hang up the pajamas and call it quits.

5. Gather the Necessary Documents

Once the dust has settled and the company has enjoyed sometime with its newfound status as a small business, it is important to make sure the documents are in order. Ideally, these documents would have been organized and filed with precision prior to the opening of the business, and are tucked somewhere safely away. Documentation is important, as it allows for transparency to clients and partners alike.

6. Hire a Trustworthy Accountant

Running a small business throughout the daily and weekly hustle can be exhausting enough. Allocating finances on top of that can be a mental deal breaker. Finance is a responsibility that rivals ownership in terms of work required, and it is absolutely necessary to shift that off into someone else’s capable hands.

7. Stick to the Budget Without Deviation

With every good business plan, there is a properly allocated budget. The other purpose of having an accountant is to procure someone who will be able to make the other heads of the business stick to the script. Without order, there will be too many loose ends in the business plan. In a high stakes gambit such as this, deviation is far from a boon.

8. Make Sure the Goals Are Realistic

Goals are important to have, but not every goal is a good goal. Periodically, it is beneficial to small business owners to take a good look at the goals they have set, and whether or not they are obtainable at all.

Written By

Dennis Hung is an entrepreneur and product analyst specializing in mobile technology and IoT. He’s spent most of his career consulting for businesses in North America.

1 Comment

1 Comment

  1. Adrian Crisostomo

    August 2, 2018 at 4:01 am

    Really great tips for small businesses especially cash flow is mostly handled by the business owners which can be quite a hard task. I really like the tip about setting a breakeven point and sticking to it. This ensures that your business will really profit from deals and customers.

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