Written by: Guest | Best Company Editorial Team
Last Updated: February 24th, 2020
Guest Post by Matt Shealy
Being an entrepreneur means, among other things, keeping close tabs on your new company's financial health. Finances can make or break your business. With the right plan and attention, your startup can thrive and have all the funding tools it needs.
Follow these tips to ensure your organization is on track.
1. Start with a financial plan
First, have a business plan.
Many entrepreneurs begin their businesses with key details in their heads and not fully on paper or in a spreadsheet, but document your plan as soon as possible with goals and concrete steps to take you there.
2. Hire a finance professional
An accountant can help you plan for meeting your tax obligations, prepare a balance sheet showing your assets and liabilities, and show you best practices for maximizing profits.
It’s a good idea to get an accountant or bookkeeper and ask for their input at least once a year.
3. Plan your loans
Loans and debt aren’t necessarily bad for your business, but you should use them with a specific purpose in mind and a plan to repay promptly. Be sure to read the agreement carefully and shop around.
There are many different types of business loans. Different term lengths, fee structures, and interest rates are available. Many short-term loans use factor rates instead of interest rates — these show you the full cost upfront, including fees and interest.
4. Separate your finances from your business
Some entrepreneurs start their businesses with their personal finances and keep the two connected, but this makes it harder to stay organized and may make it a challenge to file your taxes as a small business owner.
If possible, set up different accounts for your business and personal use. If you do use your personal account for business expenses, save receipts and keep careful documentation. Repay yourself for business expenses taken from personal money.
And if you have other investors or partners, take extra care to distinguish between your business and personal funds. Personal loans to the business should be treated as any other type of loan, too, with a straightforward contract
5. Improve your productivity
Your own personal productivity drives how well your business does financially — at least in the early days before you begin hiring a team.
Look at the return on investment (ROI) for your time in the business. Consider tracking your time using a spreadsheet or even just using a timer to give yourself an hour at a time to get some deep work done. Keep a notepad and pen handy to jot down anything that comes to your mind or becomes a distraction.
One of the biggest areas of productivity loss is busy work like data entry. For example, service based businesses see the majority of their transactions occur in the field. These transactions get placed into the field software they use, then later manually entered into Quickbooks. Using tools that can integrate with Quickbooks automate these tasks which allow business owners to stay on task.
6. Keep your fixed costs low
It's awesome to have a cool office and your own logo on custom-made promotional gear, but try to hold your fixed costs in check. Extra expenses knock down your profits and can harm your business if they become excessive.
7. Delegate if possible
Whenever you can, look for opportunities to delegate unessential tasks. If hiring a housekeeper for a few hours a week, sending out administrative work to a virtual assistant, or hiring an intern can help you become more productive, then it's worth it.
Weigh the costs carefully and compare the ROI.
Be smart with your funds
Keep your business thriving with the right approach to money and the right professional assistance. If you're looking for a way to stay organized, consider using business software.
Matt Shealy is the President of ChamberofCommerce.com. Chamber specializes in helping small businesses grow their business on the web while facilitating the connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.