14 tips for your business finances

Starting a new business is no easy task and managing your finances can be a bit exhausting. However, you can get organized from the beginning by being clear about everything that happens with it through this guide that we give you so you don’t die trying.

You don’t need to be an expert in economics

It’s clear that for many people numbers aren’t their strong suit, but that doesn’t mean you can’t manage your business finances wisely.

Just do this, create yourself some templates in excel or wherever you are more comfortable, enter information about the budget If you are talking about the budget for your business being 20 million pesos, you can’t go overboard and turn it into 50 million pesos out of nowhere.

Remember that the budget of your business is linked to the goals you want to achieve in the future, so, from now on, be aware of it.

Daily consultation of the indicators

You have an infinite number of sources so that you can consult the indicators that, in this case, impact your business on a daily basis.

If you work with imports, raw materials, products or services that have to do with the fall or rise of the dollar, you should know that this can positively or negatively affect your business, so doing your homework daily to know these movements is of the utmost importance for the finances of your business.

Do you know how to make a projection?

Being clear not only about the concept but knowing how to prepare a projection is important for your business finances.

One thing you must not forget is that both the projections and the

projections

as the budget have everything to do in achieving your goals, these are the support to demonstrate the profitability of your business and the return on investment so do not leave them aside, they are absolutely necessary to meet the objectives.

The importance of income and expenses

When you’re judicious in keeping track of your income and your

expenses

your finances are sure to benefit.

The outgoings are the outgoings or the items of discharge, it means that everything that goes out to settle accounts and pay obligations have to be accounted for on the outgoings side.

Revenue, on the other hand, is the profit, the money you receive from the activities in which your business is engaged.

Doing this will clarify your picture so you know for sure how much you have available (either to pay your obligations or to know how much money you have earned from your activity).

A good management strategy

Few people consider the importance of their company’s management strategy, either because it is small or because they are simply unaware of it.

If we told you that this one is closely linked to the success of your future finances, would you think again about implementing it?

A management strategy has to do unfailingly with the resources of your company and when we talk about resources, finances play the most important role.

To put it in context, a management strategy allows for order in the actions to be taken to achieve your goals, anticipates the changes that may occur in your daily operation and puts in order the resources to give viability to the processes.

If you have not yet defined a management strategy, we urge you to start analyzing it at least so that in the near future you can implement it in your business, your finances will also thank you.

The balance sheet, valuable information

Nothing can become more important to the management of your business finances than the balance sheet.



The balance sheet

provides valuable information about three very important items for you: assets, liabilities and equity, and these are broken down into other information inherent to each of these items.

In addition, it is a summary of everything your company has, everything it owes, what it owes, what it is owed too, that is, it gives you a general and detailed overview of how your financial situation is.

Tell us how often you prepare your balance sheet. Do you carry it annually?

Relations with banks

We know that the support and impetus provided by banks to the creation of a company is essential, they are the ones in charge of giving us that first push to get capital and undertake the challenge.

One of the things you should never do, no matter what situation you’re in, is look bad to banks. Your reputation and that of your business would be at stake, as well as closing a door for them to lend you a hand when you need liquidity.

One of the best ways to multiply your resources is to ask for a loan, and if you’re in the doldrums with them, do you think they can help you?

Separate accounts

This is a mistake that every entrepreneur easily falls into, not separating the accounts generates huge confusions and in the end you do not know if the money belongs to you (personal finances) or if, on the contrary, it belongs to your business (company finances).

Be very careful with this, it may seem banal, after all, it’s your money wherever it comes from, but that does not help to establish the order of things, the discipline required to manage money and have a clear perspective that you are now an entrepreneur, a person who has to perform with the same discipline of the employee and if I tell you, more. Now it is you who is at the helm.

Meet schedules, answer customers, get new business, manage money, are some of the things you must learn to handle very carefully so that your finances are not overwhelmed, especially because if the accounts are not separated, your head does not perceive that they are different accounts, simply understand that there is money, which is yours and you can use it for any purpose, hence the importance of clarifying to your brain that you have to separate accounts.

If you don’t work, you don’t eat

It’s a very colloquial expression but very used in our country, it means that until you generate passive income

passive income

You will have to grind and grind to “earn your bread”, another expression from the slang of grandmothers.

It’s good that your business is doing great, but as it grows, you need to start making friends with passive income, the kind that doesn’t require your presence to grow.

It is clear that when starting a business we will have to be there all the time, sacrificing vacations and family outings to be aware of its growth and implementation, but we also invite you to energize and diversify your investments so that they can help you not to sacrifice quality time.

The income from passive income is the best way to earn money without trading time and knowledge for the sake of growing your business.

Income that varies each month

Owning your own business can be seen as a great accomplishment, and it is, but we all know that when we challenge ourselves to become entrepreneurs, the start-up income will not be as stable.

This is likely to continue to happen as the days go by, that is, unless you are already fully established, with clients that you have secured every month, the income that comes in will be anything but steady.

Establish a monthly savings with part of the income that comes in, this will prevent your finances from being damaged, set aside some of that income for unstable days until you can reach a true break-even point.

Avoid borrowing for everything

Although in one of our sections we talked about the importance of having great relationships with banks to solve future cash flow problems, borrowing because you can and they give you easy money is far from benefiting the finances of your business.

There are other ways to leverage yourself, but borrowing, unless absolutely necessary, is not a good idea if you want to maintain healthy finances.

Understand what your accountant does

As we said at the beginning, you don’t have to be a financial expert to understand the dynamics of your business, but learning the basics of how to run one will ensure that no accountant is going to score a goal against you.

The basic concepts you need to understand have been listed throughout this post, for example, knowing how to do a balance sheet, establishing projections, understanding about the profit and loss statement and how your cash flow is, can help you to effectively track your finances.

Don’t take more than you give

The serious mistake in finance that has happened to many entrepreneurs is precisely to

decapitalizing the company

.

It happens that, one of the skills that the Western world lacks is patience, yes, patience to achieve goals, patience to see results and when they do not come as soon as you want, you start to go down the drain, taking from where you have until you end up with your company.

If you want to help your business finances, let’s summarize what you need to do:

  • Set yourself a salary, no matter how small it may seem, you will know that this is your allotted salary and you can’t have more.

  • It allows you to take a minimum percentage of your business profits for yourself, so you know how much you are entitled to and how much you need to reinvest in your business.

  • And since we talk about investment, is what you have to do with the money, not spend it, you must reinvest it, for example: pay for a new employee, buy new software, improve your website, pay hosting and domain, invest in sales strategies, digital marketing … in short! There are endless possibilities for you to reinvest that capital, don’t spend it.

Be aware of ant costs

These are the order of the day and of course, you don’t even notice them. The morning coffee in your

Starbucks

on the corner, the pastry offered to the guest who arrived for a meeting, the empanadita Fridays, are expenses that, because they are so small, go unnoticed, but when added up at the end of the month, they are opening a dramatic hole in your finances.

Stand firm on those expensesWhy buy a coffee that can cost $4,500 a day at one of these places, when you can just buy a coffee maker and keep coffee for everyone in your company? A pound of coffee can be in the order of $8,000 and will be enough for many drinks. With those same eight thousand pesos I could only go twice a month for coffee at that “pinchadísima” coffee shop, but you would save a lot of money a month if you stop doing it.

Let us know what other tips you could give us to make our guide more complete and help other entrepreneurs who want to be as successful as you are.

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