4 Financial Tips All Business Owners Should Follow

How well does your business manage its finances?

If you’re like most business owners, you are always looking for areas where you can improve, and trying to find new ways of generating profit. But to achieve financial bliss for your company, there are some things you can’t overlook. Here are 4 essential business finance tips you should follow to manage, evaluate and improve the financial state of your business.

1. Crunch Your Numbers Regularly

When business owners don’t have a clear insight into the financial state of the company, they are unable to stay on top of how much cash is going in and out of the business. So, it’s important to keep your accounts and books in order from day one.

If you feel particularly financially inept, automate the process with bookkeeping software solutions like Quickbooks. The program is very simple and easy to use to manage overhead business expenses, record all transactions, send invoices and calculate returns.

If you have the capacity, you can also hire a bookkeeper, or put an outside bookkeeping firm on retainer. But, whether you do it yourself or you use someone else, make sure to regularly set aside enough time to complete these tasks and keep your business finances manageable.

2. Keep Track of Cash Flow

What business owners fail to realize is that their cash flow can change every quarter. When it comes to revenue streams, a business can experience major spikes and significant losses in just two quarters depending on their industry.

For example, if your company manufactures swimwear, you can expect a surge in business during Q2 and Q3 (from April to October). For accounting businesses, they generally see a significant increase during tax season.

In order to manage finances effectively, you will also need to understand how sales cycles affect your business. If you do most of your work B2B, your sales cycle can last a few months. It’s necessary then, to secure extra capital in your business accounts, so your business can operate at normal capacity during these periods.

3. Invest Your Earnings

A business has to reinvest its earnings to be able to achieve growth and become successful. Having a zero balance on your accounts isn’t a bad thing, because you are investing profit in key areas of your business process to scale it and expand your operations. It’s a much better option than piling up cash because at one point it will become unsustainable since you won’t be able to keep up with demand.

However, business owners have to make smart financial investments to keep their business afloat. This means monitoring the financial market, keeping track of gold price and its effect on currency, and realizing what areas of the business process can bring the most significant financial gains.

For example, if you want to increase sales, investing in market research is a great way to discover an untapped market which can be exploited. Or, you can increase the marketing budget of your company and attract more customers by improving brand awareness.

It’s never to early to start investing. Invest in just one or two areas, check the performance and progress, and if one investment doesn’t start bringing in returns after six months scrap it and start over.

4. Pay Taxes on Time

Paying taxes on time is an important aspect of maintaining a good financial balance for your business. It can help you secure business loans and stay on good terms with the IRS, not to mention the possibility of claiming a tax deduction.

Hiring a tax professional to take care of all your federal and state taxes ahead of time is a great way to ensure your business doesn’t get fined and comes with a lot of benefits. Among other things, your business will improve its credit rating, get a smaller tax bill, and become more eligible for various government subsidies.

Use these financial tips to help your business achieve a positive balance. Stay on top of cash flow, pay taxes on time, and invest your profits in various key areas that can help your business grow. That’s all your business needs for financial health and future success.

Author Bio:

Diana Smith is a full time mom of two beautiful girls interested in topics related to finances and latest business technologies. In her free time she enjoys exercising and preparing healthy meals for her family. Follow Diana her on Twitter and Google+.

 

 

Are you currently using any of these tips?