Thinking of starting your own business?
You’re not alone. The age of cloud computing and digital commerce has made it easier than ever for people with an entrepreneurial mindset to seek out new opportunities. However, there are some daunting things involved in launching your own business that you’ll need to be aware of.
For instance, you’ll need to apply for your own loan, figure out how to manage your taxes, and plan for long-term growth. All of the different concerns associated with business budgeting can make finances one of the most worrying parts of running your own business.
The good news? Much of the work that you’ll need to do to keep your cash flow running smoothly involves following the same steps you would use for personal budgeting.
Here are a few tips to get you started.
1. Keep Track of Everything
The more information you have as a small business owner, the better off you’ll be when it comes to managing your finances. Recording all the cash that you have going into and coming out of your business has a lot of different benefits. First, you’ll have all the information you need to file your tax returns with the HMRC each year.
Secondly, you’ll be able to discuss your cash flow with your accountant or professional to gain insights into how you might be able to grow your business. Thirdly, you’ll also be able to boost your chances of finding opportunities to save money, because you’ll see where most of your cash is going.
2. Keep Personal and Business Banks Separate
This is one of the first pieces of advice you’ll get when you become a small business owner. Keeping your business and personal bank accounts separate helps you to reduce your risk of tax issues in the long-term. It also means that you can more easily track where you’re spending money that can be deducted from your tax costs.
Make sure that you shop around for a business bank account you can trust. Some banks will offer better deals when it comes to things like professional support, low banking fees, and even interest rates.
3. Think before You Spend
Purchases can quickly pile up when you’re running your first business. From computer software that helps you to do your job more efficiently, to coffee that enables you to get through the day, there’s always something to consider. Just as you wouldn’t spend your own money without considering your financial goals and budget first, take the same approach with your business.
Calculate the return on investment or “ROI” from every purchase you’re going to make. For instance, you probably don’t need a Starbucks every day. However, agreeing to meet with a client for lunch could be a great opportunity to network and earn more money in the long-term – making the lunch a more valuable investment.
4. Look for the Best Deals
When you’re buying things as a consumer, there’s a good chance you spend some time shopping around and looking for the best deals before you splash your cash. Why shouldn’t the same process apply when you’re looking to buy items for your business?
Rather than just assuming you’re getting the best deal for your business broadband, or the right price for your crucial supplies, look around and compare your options from different companies. Make this process a regular part of your routine by checking that you’re still getting the best price for the things that you need every few months. This will help you to save some money over time.
5. Take Your Savings Plan Seriously
Finally, as a business owner, you’re unlikely to have the same level of stability as you’d have as a standard employee. With that in mind, it’s important to ensure that you’re prepared for the worst. Having a savings account that you can turn to when seasonal changes in your sales affect your income is crucial. Whenever you earn more than you expect one month, don’t just give yourself a bonus, put that money away for a rainy day.
Taking your savings seriously will help you to reduce the risk that one bad month will send your company and everything you’ve worked for spiraling into the gutter. After all, you’ll never know for certain when you might end up losing a client or customer that could put you and your company into dire straits. The more savings you have, the more peace of mind you’ll end up with.