Starting up your own business is an incredibly steep learning curve, and if your business is going to survive, you need to learn a lot of new skills very quickly. The one area that many solopreneurs struggle with is managing finances, and that is because it is entirely different to managing your personal finances. In this article, we share some useful tips to help you to keep on top of your finances, even when they feel like they are spiralling entirely out of control.
Invest In Some Accounting Software
Even if you think you know the basics of accounting, keeping track of all of your income and expenditures is an enormous task. Fortunately, there are plenty of great pieces of cloud accounting software out there that make life a lot more straightforward. When you are managing your money, organisation is essential, especially when it comes to submitting your figures to TaxReturn.com.au. The last thing you want to be doing when that deadline is looming is to have spend hours searching for invoices that are saved all over the place on various computers and devices, so look for one that can keep all of this vital information together and keep track of your income and expenses.
Cut Your Spending
Quite simply, if you have more money going out than coming in, you are going to end up in a sticky financial mess. It is one of the most common issues that startups have, as their initial costs can be significantly higher than the money they have coming in. While you may be lucky enough to have some savings or reserve funds, these will eventually run out, you will no longer be able to cover your overheads, and before you know it, your business has gone down the drain. The most obvious solution is to make more money so that you bring in more revenue, but let's face it, if it were that easy, no one would ever have any financial issues! Cutting your spending is something that is almost never easy but vital if your cash reserves are running low. Wherever you look, you can usually reduce some expenses, even by a small amount. Look at all the programs and subscriptions you use – can any of them be cancelled? Are you paying for any equipment that no longer benefits your business? If so, get rid of them!
Separate Personal And Business Finances
It is so important to keep your personal money separate from your business money. If you do not do this, you are on a one-way ticket to making all sorts of mistakes in terms of keeping on top of cash flow. Before you know it, you are spending your businesses money on personal things and vice versa, and end up getting into a mess. It also makes bookkeeping and organising your tax return a lot more straightforward because you can see where all the money is/
Chase Up Invoices
One of the (many!) unfortunate things that a business has to do is make sure invoices are paid, and while most are paid in good time, there is always the odd one that messes about when it comes to paying what they owe. Chasing up invoices can be stressful and time-consuming, and something no business owner particularly wants to do, but it is crucial that you do make sure they are paid. It can cause you huge cash flow problems, particularly if you are in a field where you have had to pay out for resources or manpower beforehand as you end up out of pocket. Keep on top of invoices by making the amount they owe and the date they need to be paid by clear and chase up as soon as they become overdue. Do not be afraid of adding on late payment charges if appropriate and if they still do not pay up, seek legal action to recover any monies owed to you.
Don't bury your head in the sand
One of the worst things that you can do as a business owner is to make like an ostrich and bury your head in the sand when times get rough – and for pretty much every business, there will be times when it is rough. As soon as you see any problem developing, take proactive steps to stop it getting any worse.
By following these pretty basic steps, you can learn to manage your finances properly and make sure that your business survives in the long term without causing you too much hassle in the short term.