Mastering Finances: Five Essential Tips For Small-Business Owners

“My best tip for small businesses when creating a financial plan is to schedule reviews. Once you have your plan in place, it is essential that you review it often and compare how well the strategy fits with the actual monthly expenses. This will help you adjust your plan accordingly and prepare for the year ahead,” suggests Janet Patterson, Loan and Finance Expert at Highway Title Loans. Your profit and loss statement (also known as P&L or an income statement), both for the current month and year-to-date, tells you how much you earned and how much you spent.

Whether you use Excel, online small business accounting software, or good old-fashioned pen and paper, you’ll need to choose a system that makes it easy for you to enter every sale and purchase. At minimum, you need to track amounts, dates, vendors, and clients. But if your small business starts overshadowing your day job, talking to a CPA to make sure you’re on track is highly recommended. CPAs don’t just file your taxes—they also can help you with financial planning, tax planning, lease negotiations, financial reporting, tax compliance, and treasury management. Chances are, with a little digging, you’ll be able to find some rough numbers on the level of growth to expect in your first year and which months will do the heavy lifting in terms of sales.

But, of course, lending speed and flexibility often come at a price. Supply chain disruptions and volatility have impacted retail, restaurants, and healthcare. As many businesses go omnichannel to reach more customers, financial inefficiencies can arise if inventory isn’t being properly tracked across multiple channels. Some types of businesses are overwhelmed with excess inventory, while others are trying to keep up with a surge in customer demand. Both situations can lead to lower sales, a poor customer experience, and financial instability if businesses don’t know what they have in stock.

  1. The beginning of the month is a good time to send overdue reminder statements to customers, clients, and anyone else who owes you money.
  2. Equally, if you just make the minimum payments every month, you can create a debt that’s difficult to clear.
  3. Plus, the application process isn’t easy; you may find yourself trapped under a heap of documents while you work through the appropriate forms.
  4. A budget helps you plan and track expenses, preventing overspending and ensuring you always have enough funds for necessary expenses.
  5. Evaluate your purchase, liability, credit, and interest needs when considering using a business debit or credit card.
  6. In addition to SBA loans, credit unions can offer a range of funding options, including lines of credit, traditional term loans and business credit cards.

If vendors offer discounts for early payment, you may want to take advantage. Since cash is the fuel for your business, you never want to be running on or near empty. Knowing how much you expect to receive and how much you expect to pay during the upcoming weeks and months is important too.

Process or review payroll and approve tax payments

Our partners cannot pay us to guarantee favorable reviews of their products or services. The most important part of a financial plan is sharing it with stakeholders. You can also use much of the same information in your financial plan to create a budget for your small business. Create a strategic business plan that includes your business strategy and goals, and define their financial impact. Your financial plan will inform decisions for every aspect of your business, so it is important to know what is important and what is at stake. Included on this page, you’ll find what to include in a financial plan, steps to develop one, and a downloadable starter kit.

Set up good financial habits.

It should document your total cost of borrowing, how long it will take you to pay off the loan, your payment schedule and more. A lien is a legal right to any collateral you have pledged for your business loan. Your lender, or lien holder, may file a lien in your business’s name on the piece of collateral you pledged, which allows it to seize that collateral if you default on the loan. Our growth specialists can create tailored funding offers to help your ecommerce business.

Small business finance FAQ

Begin by listing each of your income sources and breaking down your expenses. Don’t forget to include both the fixed costs (rent, utilities, salaries) and the variable costs (marketing, office supplies, maintenance). However, your budget should also account for those unexpected expenses, savings for future investments and an emergency fund for those rainy days. is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions.

How you present your brand will contribute directly to your pricing strategy. The way you position your business is a less tangible factor of setting your price, but it’s definitely a factor. A quick Google search for examples of budgets in your industry can help you figure out anything you might have missed.

To prevent this, have three months’ living expenses saved plus the amount you are expecting to need for the first three months’ business expenses. Leasing equipment instead of buying helps you avoid maintenance costs and can also prevent you from overpaying on equipment only needed for a specific period of time. Also, consider renting your office space to make relocation and expansion easier. There will always be business where petty cash appears in the balance sheet issues that need to be addressed today, but when it comes to your finances, you need to plan for the future. “If you’re not looking five to 10 years ahead, you are behind the competition,” said Tina Gosnold, founder of QuickBooks specialist firm Set Free Bookkeeping. Measuring expenditures and return on investment (ROI) can give you a clear picture of which investments make sense and which may not be worth continuing.

For example, if your business has strong qualifications but prefers an expedited process, Funding Circle is a great option for traditional term loans. For businesses that want a flexible line of credit, Bluevine, OnDeck and Fundbox each offer competitive products. There are a variety of small-business lenders out there that offer online loans — and the best option for your business will depend on the type of financing you need and what you can qualify for.

Let’s look in more detail at the differences between each of these financial tasks, why you need them, and how to manage them in a way that’s right for your business. You can avoid the lengthy application processes with minimal paperwork and no credit check. Within funding through Shopify Capital, you can get the financial support you need quickly and easily. I just didn’t want to deal with the whole process of going through a bank—I wanted to focus on the business.

Sales Forecast Template

Remember that in addition to income taxes, you’ve got to prepare for sales tax, payroll tax and any other applicable taxes for your specific industry and location. • Consider a line of credit or short-term loans to cover seasonal fluctuations. Once you’ve created a workable budget, don’t forget to review and update it regularly.

It’s tempting to use a single bank account for everything, but this can quickly lead to chaos, financial confusion and even legal trouble. If you’re running a small or midsize business (SMB), it can be tempting to put everything into your day-to-day operations. After all, that extra capital can often go a long way in helping your business grow.


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