Even among small business owners, some just aren’t numbers people. Whether you struggle with understanding business finances or simply hate dealing with them, it’s important to know that these feelings will only get worse if you allow things to go unchecked. If you’re starting a new small business, it’s vital to keep your finances on track from day one. Here are some tips, courtesy of the investment fund pros at Capital Savings Fund.
Start with a plan
Yes, you need a business plan. When it comes to running a small business, vagueness and generalities are the enemy. The more specific you can be about your business’ goals – from day one to years down the line – the better prepared you will be for whatever financing issues arise. A business plan should include what you’re selling, how it fits into an overall market, how you plan to finance your operations, what costs you expect to incur, and an operational plan for how you will function on a daily basis (among other things). Check out this resource from the Small Business Administration for the basics on creating a solid business plan. As you can tell, starting a business brings countless responsibilities, and as an entrepreneur, you’ll be on the lookout for any way to make your day-to-day work life a little easier. By registering your business as an LLC, you can take advantage of several tax perks, establish limited liability for yourself as a business owner, and maintain flexibility in your business management strategy. If you’re ready to begin this process, check out the rules and regulations for your state first, as each state establishes slightly different guidelines. If you don’t feel confident filing on your own, you could budget for a lawyer’s fees. You could also use an online formation service to file.
Create a detailed budget and stick to it
You’re not going to make money unless you know how you’re first going to spend money. That’s the point of a budget. For people who don’t like dealing with the nitty gritty of the numbers, the process of building a detailed budget may seem daunting. In fact, it’s a pretty simple thing. Your budget is what you plan to spend on all of your business operations, or put in another way, how much money you plan to allot for particular business expenses. In order to set a budget, you must consider your cash on hand, your revenues, and determine what sort of profit margin you’ll need to keep your business running comfortably (turning a real profit may be months down the line for a new business). Your budget should be detailed and though it should be flexible (revenues change, expense obligations change), once you’ve determined your budget for a particular period, you should stick to it. Here are some good resources on crafting a solid budget.
Don’t forget about your marketing costs
One of the most common ways businesses find themselves with unaccounted for expenses and financial hell is that they don’t plan for increased marketing expenses. In this day and age, digital marketing will be the most useful medium, and you must figure out a digital marketing plan from day one. Having a strong online presence in the form of a slick, functioning website and a robust social media presence is the most cost-effective way to digitally market your business. More cost effective methods include indexing your business in local directories as well as using email to build customer/client lists and marketing to them directly. One way to make dealing with the numbers more bearable is to attach specific goals to each expenditure. It helps to have a concrete goal for each bit of marketing you spend money on. How many potential customers will X ad net me? What specific clientele base do I think I can snag with X digital strategy? One way to surely drive yourself crazy is to just throw money at advertising without specific goals in mind, just hoping something sticks. For those business owners who shudder at the thought of having to crunch numbers on a daily basis, the best advice is to get as detailed as possible as early as possible. If you keep everything tight from day one, you’ll prevent much of the stress that comes with having to do major expense overhauls as your business matures.
Capital Savings Fund offers high-yield savings accounts at a 10% annual interest rate. You can take advantage of this incredible offer by calling us at 410-881-2829.
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