We all want to start our own business. Some have achieved this goal, but the finances have gotten out of hand, resulting in the closing of the business. This doesn’t have to be the case. There are many ways you can stay on top of your business’ finances as well maintain as positive cash flow.
Review your Costs
Many do review their costs, but they do it monthly. You should review your costs weekly. This means all business expenses, from office supplies to business lunches (and coffees).
Make Financial Forecasts
No one likes to do this because they want to focus on the progress their company is achieving right now. Forecasting helps you plan for future obstacles that would prevent you from expanding your business or keeping your business afloat during slow months.
Create a Business Account
It may be very convenient to keep both personal and business spending in one account, but this will set up you for failure. You will have a hard time differentiating personal from business spending and you will create a big tax headache. By creating a business account, you will be able to identify your spending patterns, track your expenses better, and set aside money for taxes.
Give Yourself a Low Salary
Starting business means you get paid last. You will pay the operating costs and bills first. Thus, you should give yourself a low salary (the lowest you can afford) to be able save money now and allocate money for future expenses (i.e. lean months). Keep in mind, this is only a temporary measure until your business produces a profit and becomes sustainable. And when you are determining a salary increase, there are many ways to do this, such as setting it as a percentage of the profits or checking industry salary averages.
This is another way to save money, especially during the first phase of your startup. It’s also a good habit. When starting out, do not go for an expensive workspace or even furniture. Most startups were started in a garage or bedroom — and stayed there until there was an absolute need for more space. You can also handle your own marketing through social media and by holding events. Utilizing technology is another way to stay frugal. Start using a tablet or laptop for taking notes and storing documents (i.e. cloud). Instead of using handouts, you can create slideshows for meetings. Also, there are many free apps instead of using high-priced software for business services.