Tips for Managing Small Business Finance
Recently, many people have decided to start a small business or business. Unfortunately, many businesses fail. What are the causes?
The success of a business is very much determined by how you manage it. If it is managed properly, the business will run smoothly. Conversely, business will be bad if it is poorly managed.
Before you dive right in, it's a good idea to strengthen your understanding of business theory, especially about managing finances.
Here are tips for managing small and medium business finances that you must understand before starting a business.
Tips to Manage Business Finance
Self-education
Self-education is the first thing you should do when managing your business finances. The way to educate yourself can be by learning how to read financial reports.
Basically financial statements have 4 parts:
- Balance sheet
- Income reports
- Cash flow statement
- Capital report
By learning how to read financial reports, you can at least conclude the steps to be taken for the development of your business.
Do Planning
Planning is generally necessary before you start a business. Prepare the big picture and the first steps that you will take in starting a small business.
Once the big plan is made, divide it into sections, such as daily, weekly and monthly plans. Thus, business development becomes more structured.
You also need to be detailed in planning. Starting from what things will be done, the needs needed, as well as the capital that must be prepared. (businessnewsdaily.com)
Creating a Financial Logbook
Finances in business must always be recorded. The goal is to oversee all cash transactions that come out and go. Record keeping also reduces the risk of unreasonable expenses.
No matter how small the scale of a business you are running, at least provide a cash book. This cash book is used to record money going out and coming in accompanied by evidence.
Financial records are not only limited to incoming and outgoing cash. You can't ignore debts and credits. Because this involves the assets or assets of the company you are starting.
Notes in the financial notebook should be made in detail and orderly, so that they are easier to read and understand. Sort by date and time of the transaction.
Make a Budget Regularly
Budgeting is also important in a business. Budgeting aims to limit expenses so they don't swell.
It's a good idea to make a budget on a regular basis, for example every month or every week. Separate expenses based on the group. Make sure all business needs can be met.
Making a budget regularly can also increase efficiency in a business. It will have good effects in the long term.
In determining a budget, you should consider the notes in the cash book. So you can figure out which budget to increase or decrease.
This is because the making of this budget cannot be separated from one period to the next. Everything has to be continuous so that the business can run smoothly.
Monitor Financial Cash Flow
The next tip for managing small business finances is to oversee financial cash flow. The purpose of this monitoring is to prevent cash leakage.
It's quite difficult to monitor cash flow, because it requires high accuracy. A basic knowledge of accounting is required so that you can understand good financial cash.
Rotate Cash Flow Faster
Good business financial management is also reflected in how you manage your accounts payable well.
Rotate your cash flow, many entrepreneurs have difficulty turning their cash flow.
It's important to know that debt management is related to cash flow turnover. The cash flow cycle will slow down if the credit sales period is longer than credit purchases. So a balance between the two is very necessary.
Use Profits to Grow Business
A business is said to be successful if you get a big profit. Instead of just spending it on personal needs, you should set aside the profit to grow the business.
From every profit earned for one month, set aside at least 10% to be added to the business capital. So, the business will keep growing.
Monitor Assets, Debt and Capital
Every asset, debt and capital must be recorded in a structured manner. Because all of this affects the sustainability of the business you run.
Receivables are company assets, and you must keep records of them properly. Otherwise, you may lose company assets without realizing it.
Debts that you have should also be recorded, although the creditor has his own records. This prevents double payments or unilateral claims by the lender.
All items owned by the company must also be recorded in the inventory record book. Do regular checks to make sure the item is not lost.
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