Published On: Thu, Oct 4th, 2018

Manage your small business finances and keep costs down

What do you mean by small business?

Small business refers to the company running by the first-generation entrepreneur with lesser funds and reach. Many of these types of business have low annual revenue and also the number of employees is less as compared to big business. Many companies come under the category of small business like hair salons, café, recruitment organizations, confectionaries stores, and medical stores. The margin of investment and the amount of profit gained is less as compared to big businesses.

In this type of business, the management of money plays a significant role in the running and development of it. The cash flow should trace on the quick sort of time. The cash flow includes-

To receive money from the customers.

To manage the total amount.

To manage the rest amount.

To invest some amount for the development of the business.

Maintain the stocks for the remaining amount.

Now for every small business, the cost plays a significant role for both the customer and for the owner. Increase in price will affect the number of sales and decrement in price will also decrease the amount of profit. To maintain a good business, you should manage all the factors which influence your profit and sales, and for this cost would be an essential aspect of your business.

photo/Gerd Altmann

How to manage the business finance and keep the cost down?

To manage your business finance and also keep cost down you should follow some of these ways-

Hire a good bookkeeper

A good bookkeeper can help you in numerous ways. A bookkeeper helps you to keep track of all the incoming and outgoing of capital, which would help you to understand your business better. Hire a good bookkeeper to maintains reports on a daily basis which would help you to get the clue of ups and downs of the market.

Always keep the records of all the generated invoices, as it helps you to serve your customer with better services. The invoice should have a section of term and condition, and in that section, you should state all your words.

If you have a loan on your business, then it should be your first step to pay back the mortgage on time before paying any taxes. You can also consolidate debts a lower interest rate.

Keep your business plan updated

Undoubtedly, the most important factor that plays a vital role in the development of any business is the business plan. It is essential to have a properly researched business plan to move towards a successful business.

Planning is the first step that is to be done and shouldn’t have any loopholes in it. After the preparation, when only the execution is remaining, the situations become different than what would have expected. For any business, the business plans should always be modernized. Always keep more than one idea for every situation to face the uncertain events. A better business plan will lead you to the success.

Variable expenses versus fixed expenses

Fixed expenses

The name itself suggests that you need to make a payment of a fixed cost every month. The fixed expenses cannot be modified, and you need to pay them without any alteration in the amount.

Variable expense

In this type of payment, the amount of money is not fixed. It may be possible that in one month there is a low variable cost as compared to the previous month. The variable value is the one which determines the amount of profit gain in a certain period.

Spread out tax payments

Taxes are mandatory to pay. The government set up the amount of taxes on different factors and has different margins. The sum of tax should pay prior in a month. You should have a note of the desired amount which is for the payment of fees in your transaction book. After all the tax payments, you must distribute the expenses to your employees.

Photo/donkeyhotey donkeyhotey.wordpress.com

Be ruthless with overhead expenses

Every business faces competition from various other businesses of the same niche. In this scenario to make your business better than others, you should cut all the overhead costs.

Below are some of the effective ways by which you can minimize your overhead expenses-

Reconsidering the company structure is the first step that will help you. Avoid over employing the people and keeping track of the work done by each employee.

Monitor every expense and cut down the overhead cost.

Time management is necessary among the employees, and you should make the employee feel comfortable in their works so that the work will complete on time.

Don’t be dependent on freelancer for any critical task.

Set up good financial habits

Develop the good financial habit as a leader and take the right decisions which would be beneficial for you as well as for your team. Think and strategize well to make your business stand out from the crowd.

Author: Kevin Tomlinson

With over 10 years in the financial vertical, focusing mainly on debt, Kevin Tomlinson is an experienced writer with the best tips and tricks for dealing with the debt of any sort. Kevin works best with debt settlement, Debt Consolidation, Tax Debt Relief and Student Loan Debt. 

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