Only 40 percent of smaller independently owned and operated businesses survive for five years or more, according to the U.S. Small Business Association. The Federation of Independent Business (NFIB) reports that only 39 percent of these independent businesses are profitable.
If you want your business to succeed, you’ll have to learn how to manage your business finances.
Poor business financial management is one of the top reasons businesses fail. Managing your personal finances can be challenging, and managing your business finances is even more challenging. But if you can’t collect, track and save your money appropriately, you’ll be risking your profitability and success.
Improve Your Business Financial Management
Be proactive. Applying sound business principles to all of your decisions will help ensure your company’s success and longevity. Don’t rely solely on your accountant, bookkeeper, financial planner or banker. Keep all your records up-to-date, learn the basic principles of small business finance, and apply them on a daily basis.
Collections: The First Step to Good Business Finances
Credits and Collections: Determine if you should accept credit cards, and other forms of payments, and learn the best methods for quickly and efficiently collecting debts. Find out how alternative payments, such as trading products and services, or factoring, can positively or negatively affect your business.
Tracking: The Second Step to Good Business Finances
Basic Bookkeeping: Learn how to record your daily transactions, generate financial statements, and work with your accountant on a regular basis – or do it yourself with any one of the many financial management tools that are available today.
Cash Flow Management: Learn to manage your cash and liquid assets by assessing and projecting your needs. Always look for ways to increase your income and reduce your expenses.
Trend Forecasting: Identify positive and negatives factors that can help you manage your business finances more efficiently over time. Write these down and make sure you check them periodically.
Other Important Areas for Good Business Financial Management
Banking: Learn which type of savings and checking accounts are best suited to your needs.
Investing: Learn how to maximize the return on your surplus cash by choosing the best investments.
Evaluating: Evaluate expensive potential capital investments, like equipment, facilities and more