One of the most important tasks for business owners to be good at is budgeting. Being good with money in business can make the difference between succeeding and failing, or at least not growing as quickly as you might have anticipated. Finances might not seem particularly important, especially when you have a big loan to play with, for example, but if they are not taken care of then spending can easily get quickly out of control, and that big loan amount will soon disappear.
A business owner needs to be sure of precisely what is going in and out of their business in terms of money. Paying attention to this right from the start is crucial, and a good habit of getting into. Here are some of the things you should be looking out for.
Keep Good Records
Keeping good records is something that all business owners must do. Depending on the state in which you are running your business, records will need to be kept for a certain amount of time, so be sure to check this out. However, it’s not just about keeping up with legislation; keeping good records will help you stay on top of your business finances as well.
Using spreadsheets is a great idea to keep track of all your income and expenditure. Once everything is inputted, you will be able to see at a glance what you bought and when, and who paid you and when. You can even tally up the totals to ensure that you are sticking within budget. Not only will you be able to make sure you’re not overspending, but you’ll be able to see what profit you are making (and change your pricing accordingly) and you can keep up with supplier prices too.
Check Your Credit
A good credit score is vital in all areas of life, and even in your business finances. It is essential that you check your credit report, and that of your business, to ensure that all is well. If there is a problem you will need to work on fixing it, and this guide will help you to do just that.
It’s not just mistakes that you might have made regarding finances such as missed payments on business loans or personal ones; you should check your credit report for errors as well. Although mostly automated, the system isn’t guaranteed to be entirely error free, and any mistakes that you spot should be reported immediately, as they could be having a detrimental effect on your borrowing power. If you need to obtain a business loan or a personal loan to help with your business, and there are errors on your file, this might be impossible, and that can have a severely negative impact on your business.
Just like at home, you will be spending money on electricity, gas, water, and other utilities in your business such as air conditioning, for example. It is a wise idea to periodically check that you are paying a good rate for these essential utilities, and if you find that you are not, switch to a different supplier, or try to negotiate a better deal with the one you are already using. Either way, if you are overspending and can save money, it is something that you should do.
It might seem like an effort and something you just don’t have time for, but if you add up how much you are overspending, you might be surprised at the waste of money. It is worth taking an hour of your time to get a better deal if it saves you thousands in the long term.
Spend Where You Need To
Being good with money is not the same as refusing to spend any money at all. This can be just as damaging to your business as overspending; even if you are saving money in the short term, if it isn’t going to help your business in the long term then it is not a good idea.
In some cases, you will need to spend money on your business. Marketing will need a good budget, and if you need to outsource or employ people then that should be done too – putting it off to save the cash will mean slower growth and put more of a burden on you. Having the right tools and equipment as well as a high standard will ensure that you do the job well. Spend money where you need to in your business, and it will pay dividends in the end.