Track Your Income
It’s important to know how much you make. You can track your income, monthly, weekly, or even daily so you can better understand how much money you’re bringing in.
Compare your current income with previous income so you can establish trends. Discover what is the main drivers of business income and what are your services that produce less income.
Track and Audit Your Expenses
If you’re going to track your income, you need to track your expenses as well. Entrepreneurs have important expenses that must be paid in order to keep the business running.
What are the trends in your expenses. What are your major expenses ? Are they related to your man income streams of not ? You should eliminate the expenses that are not producing higher incomes. The ultimate goal of an expense is to create more income for your business or to allow you to run a business efficiently.
Keep a Separate Bank Account
As soon as your business starts making money, you need to separate your finances. I kept all my personal and business finances in one bank account during my first year of entrepreneurship and I truly regretted it. I was super confused around tax time and everything was so unorganized. It took countless hours to get back reorganized.
Allow your income to filter through that account and you can pay all your expenses from that account. Each month you’ll receive a statement and it will be easier to keep track of your cash flow.
Make Financial Analyses
Performa Financial Analyses. Create key performance indicators so you can track your progress. You should know your numbers very well as they will indicate what’s working and what needs to be improved before you have a greater repercussion.
Consider Your Cash Flow Statement Very Closely
You want to make receiving payments a smooth and easy process. To do that, you need to determine how you’ll accept payments. Making this choice depends on how your business works. If you’re providing a service, you may want to send invoices out regularly. If you’re selling products, you may want to accept credit card payments at your location or set up an online cart option for your website.
Receive your money before you pay your bills! Make sure you have a close understanding of you cash flow statements and forecasts as they are the life of your business.
Schedule Regular Money Meetings
It’s important to schedule time to sit down and go over your business finances regularly. Your income and expenses will fluctuate, so it’s best to stay on top of things by checking in often. Add a weekly finance meeting to your calendar so you can stay organized and avoid falling behind on things.
When you fall off the wagon with your business finances, it makes it difficult to stay productive and understand what’s truly going on with your situation.
This can allow burdens like debt to creep in and deter you from financial success with your business.
These basic 5 starter steps will help you get on track and better organize your small business finances. You can also do other things like create a business budget, start contributing to a Roth IRA or SEP IRA for retirement, get accounting software, or even hire Veritas Management Group o to take next steps.
