Financial management might be one of your greatest challenges you will face in starting your own business. Managing and controlling your business’ financial activities might seem hard specially if you don’t have any experience doing so. But, as a new business owner, you should have at least the basic knowledge and skills in financial management. Yes you can hire a financial advisor or a treasurer to help you out, but being completely ignorant about financial management will do your business no good. It is important that you invest time in learning the basics and eventually you might be able to manage your business’ finances all by yourself.
Let’s discuss the things that you should learn to start managing your business’ finance:
- Capital Expenditures
There will be a lot of things you need to spend on when starting a business. You need to consider that your expenditures must balance your income. You should not overspend on your assets and they should be able to produce a profit.
- Book keeping
If you have no experience in bookkeeping, you can hire someone to do this important job. They can set up your bookkeeping system and do basic financial analysis. But still, you should be able to learn to understand financial data and if you could learn bookkeeping yourself, it will be better for you and your business.
- Managing Cash Flow
You need to make sure that you make enough money to pay off your bills. Creating a cash flow statement will help you manage your business effectively. This is extremely important especially if you have staff salaries to pay. Monitoring your outstanding invoices is critical. Get a good admin to chase the outstanding payment from your clients to maintain a good cashflow health.
For every type of business, it is important that you need to set your budget on things you spend on. A budget will tell you how much you need to spend and how much you will earn over a period of time. It is like a projection of planned income and planned expenditure over a certain period of time.
- Tax Planning
One of your responsibilities is to plan taxes. You need to know how much you should pay for taxes to make sure you have a payment on hand. If you are aware how much tax you need to pay for every year so that you could anticipate how much you need to save for it. Do some donations, you can always get some tax off and do charity work at the same time!