13 Unknown Tips to Manage Finances for a Small Business
Recently, many people have decided to start a small business. Unfortunately, many business actors fail. Because most of them do not know how to manage finances for a small business. The success of a small business or business is largely determined by how you handle it.
If operated properly, the business runs smoothly. On the other hand, the business will be messy if it is poorly managed. Before you dive right in, it’s a good idea to strengthen your understanding of business theory, especially about how to manage finances.
How to Manage Finances for a Small Business
Well, for those of you who are looking for how to manage finances for a small business, we have some tips that you can put into practice for your small business. Read more on the following points:
1. Self Education
Self-education is the first thing you do when managing business finances. The way to educate yourself can be by learning how to read financial statements. For those of you who don’t know, basic financial statements have 4 parts, namely:
- Cash flow statement
- Capital Report
- Earnings report
- Balance Report
By studying and reading the financial statements, you can at least conclude the steps to be taken for the development of your business.
Planning, in general, is one how to manage finances for a small business that needs to be done before you start a business. Prepare the big picture and the initial steps you will take in pioneering.
Once the grand plan is made, divide it into several parts. For example, daily, weekly, and monthly plans. In this way, business development becomes more structured.
You also have to be detailed in making plans. Starting from what things will be done, the needs needed, and the capital that must be prepared.
3. Financial Logbook
How to manage finances for a small business should always be noted, even large businesses still need it. Its purpose is to monitor all incoming and outgoing transactions. Record keeping also reduces the risk of improper spending.
No matter how small the scale of a business you run, at least provide a cash book. This cash book is used to record incoming and outgoing money accompanied by evidence.
Financial records are not only limited to cash in and out. You can’t ignore debts and receivables. Because this concerns the assets or assets of the company that you are starting.
The notes in the financial book must be detailed and orderly so that they are easier to read and understand. Sort by transaction date and time. Financial record books can be created manually. However, this system is considered less effective. In addition, the possibility of calculation errors is even greater if the recording is done manually.
Fortunately, there are many applications that you can use to help manage your small business finances, these applications are widely available on the Google Playstore and App Store.
4. Turn Cash Faster
Good business financial management is also reflected in how you manage accounts payable well. Turn your cash flow, many entrepreneurs have difficulty turning their cash flow, why is debt management related to cash flow turnover?
The cash flow cycle will also slow down if the credit sales period is longer than the credit purchase. Therefore, balancing the two in the procedures for how to manage finances for a small business is very necessary.
5. Make a Budget Daily
Not only recording finances, how to manage finances for a small business by making a budget or budgeting is also important in a business. Budgeting aims to limit spending so as not to swell.
It is recommended that you make a regular budget for example every month or every week. Separate expenses by the group. Make sure all the needs in the business can be met.
Making a regular budget can also increase efficiency in a business. This will have a good impact in the long run. In determining the budget, you should also consider the notes on the cash book. So you can know which budget to increase or decrease.
Because the making of this budget cannot be separated from one period to the next or previous period. Everything must be sustainable so that the business can run smoothly.
6. Monitor Financial Cash Flow
Tips and how to manage finances for a small business is to always keep an eye on financial cash flow. The purpose of this supervision is to prevent cash leakage. It is not easy to monitor cash flow because it requires high accuracy. Basic accounting knowledge is also needed so that you can understand good financial cash.
But you don’t need to worry because the BukuWarung application is now available. This application can be used to record books and save your business financial cash data.
The stored data will be processed and produce structured reports. With the help of the BukuWarung application, you don’t need to be confused anymore in monitoring the cash flow of your business finances.
7. Separate Cashier and Accounting
Giving a cashier’s job desk who doubles as an accountant is a big mistake. Cashiers who hold concurrent positions as accountants are likely to be able to manipulate financial statements. Of course, this will affect the financial condition of your business. Therefore hire accounting and cashier separately.
8. Separate Business Money and Personal Money
No matter how small the business you run, you should separate the money used for business with personal money. The purpose of this separation is to prevent business capital from being used for personal purposes.
The worst thing when you keep combining business money with personal money is that the capital runs out without being noticed. This situation will make your business forced to go bankrupt.
Use a different place between personal money and business cash. You can separate it into two different wallets. It’s also a good idea to create a separate account specifically for your business. You must also commit to not using business cash to meet personal needs.
9. Monitor Assets, Capital and Debt
Every asset accounts payable, and capital must be recorded in a structured manner. Because in how to manage finances for a small business, all of that can affect the sustainability of the business you run.
Receivables are company assets and you must record them properly. Otherwise, you may lose company property without realizing it.
Debts you have to partners should also be recorded, although the creditor has his own records. This prevents double payments or unilateral claims by the creditor. All goods owned by the company must also be recorded in the inventory log book. Check regularly to make sure the item is not lost.
10. Use Profit to Grow Your Business
A business is said to be successful if you get a large profit. Instead of just spending it on personal needs, you should set aside the profit to grow your business.
From every profit earned for one month, set aside a minimum of 10% to be added to business capital. In this way, the business you are starting can continue to grow.
11. Pay Attention to Third Party Contracts
Partners in how to manage finances for a small business are also very important. Many people make the closest people as business partners. This is very vulnerable to the continuity of your business, try before working together, pay attention to your contract, try to be black and white.
So if at any time there is a breach of contract obligations, it can be evidence for you. Those are some simple tips from us on how to manage finances for a small business that you can try to apply to your business.
12. Prepare an Emergency Fund
We will never know what will happen to our business in the future. The worst things can happen. For example, natural disasters or revenue continues to decline due to the emergence of competitors. Things like this can put your business in an insecure position. You need to prepare a reserve fund to anticipate difficult times.
This emergency fund should be prepared from the start before you start a business. You should also use these funds wisely. Do not use it in situations that are still under control.
If you experience a loss, then these funds can be used. Whereas in normal and stable circumstances, you can assume that this emergency fund is an advantage that you get from the business.
13. Use Professionals
This how-to manage finances for a small business can be an option for those of you who are not able to handle business financial management. You can hire professionals to manage your business finances. Try to have experience in this field, because good financial management will have an impact on decisions taken in business development.