Finance Tips & Tricks That Will Benefit Your Small Business

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When it comes to small businesses, every cent counts and competition is steep, which is why keeping on top of your finances is absolutely crucial. Here are some useful tips and tricks you can use to be in peak financial health.

Be Sure to Have Multiple Bank Accounts

Finances of any kind tend to be incredibly confusing, but that’s especially the case when you’re dealing with a combination of both personal and business expenses. Don’t make the mistake of having your personal bank account act as your business account or vice versa. Unlike personal expenses that typically involve a set of fixed costs every month with some additional flexible spending, business expenses can be incredibly tricky.

Cash flow, rather than revenue, is often the most important factor when running a business and personal money being mixed with business money can make it very difficult to understand how flexible you are when it comes to business operations.

If you have $5,000 in the bank, that might seem like a decent amount of money to hold you over, but if your personal expenses are $2,500 a month and you end up having to immediately repair a piece of equipment for $3,000, that can cause some issues. Having a business and personal account combined can give you a false impression of how much money you can spend, especially when it comes to emergencies.

Invest in the Right Products for Your Customers

When you are providing a service for customers, it is of the utmost importance that the products that you invest in are top quality. Not only are they less likely to have problems, but they are sure to last longer as well. For instance, if you own a laundromat you will want to invest in excellent commercial washer and dryer options that are going to benefit your customers over a long period of time. It can also save you a significant amount of money when you invest in products that are efficient.

Seriously Consider the Difference Between Buying and Leasing

There are certain instances where outright buying something is a tremendous idea, but there are others where it’s the worst option imaginable. The number one thing to take into account when you purchase something for the long haul is depreciation (and to a lesser extent, repair). There are lots of assets you can get your hands on which increase in value over time, so owning the actual legal rights to them could improve your capacity for business growth down the line. However, especially when it comes to equipment, inherent value and functionality tends to decrease over time, which can result in future expenses you might not want to take on.

Generally speaking, rented items on a monthly basis are going to be more expensive than purchased ones since the companies renting them out are looking to make a profit. That being said, there are huge long-term issues with the costs of repair. With rented items, you’re often not responsible for the costs of repairing them, which can actually save you money at the end of a lease period. It is going to cost more when renting than when buying, but the repair bill associated with their maintenance will only increase over time, so renting would definitely be the cheaper overall option. So, when thinking of buying or renting, always consider going with something that doesn’t end up being a money pit, even if it seems less expensive.

Develop A Long-Term Business Plan

Almost every business succeeds or fails due to the type of planning being done and the vision a business owner has. While “winging it” can sometimes be an effective strategy for getting from one part of running a business to the next, it’s rarely something that’s sustainable; you need a plan. Business plans don’t necessarily have to be convoluted, intricate, or heavily detailed, but they do have to contain a web of suggestions of how to move forward when certain milestones are reached as well as how to spend downtime productively.

While ideally business operations would just function at a normal, steady, eat to manage pace, that’s usually not what happens. There are times when things are slow and others when everyone needs to be working at 100% capacity. Having a business plan that you constantly reference will prevent you from getting distracted and help you focus on the long-term outlook of everything.

This planning is no more relevant than in the field of finance. As mentioned before, cash flow is extremely important and not having enough money on hand when there’s an opportunity for expansion could potentially spell disaster for your business. However, understanding what these opportunities are and how to prepare for them is going to be intrinsically tied to your business plan.

Maximizing Financial Health

Your business is likely one of the most important elements in your life, so it’s good to ensure its longevity. Always make sure that your business finances are in order and that you know how to take advantage of opportunities when they come your way.