Some would say: if you don’t know about a certain business too well, don’t go into it. Well, while such ideology isn’t unfounded, understanding the rudiments of a business isn’t the only contributing factor to success. In order for your business to thrive in this highly competitive world, you need to deal with an endless stream of complex problems and administrative tasks, which require a lot of expertise and attention. One of them is your business finances. Ideally, a business owner is supposed to hire an expert to handle his business finances and cash flow, but the meagre amount of funding often available to small business owners makes the possibility of working with an expert seemingly unrealistic. Hence, as a small business owner, you simply have to become your own financial advisor as well officer. Here are a few tips to get you started on that front.

Kick against expensive credit

In order to build a successful portfolio that benefits your business now and later, the first and foremost tip for managing your small business finances is to establish financial goals. Whether you have an established business in the market, or you are just raising capital for a startup, the optimum use of funds is the key to success. In the growing period of a business, the cost of credit plays a significant role. Hence, you need to set up your interest core at a bare minimum price and reduce cost and attain profitability earlier. Avoid credits that come with a high cost as well as high-interest credits too.

Watch your expenses

Whether you are a starting or growing business, it is important for you to make your fixed expenses as low as possible. Like it or not, expenses will stop and hinder your gross revenue from going into your piggy bank if you don’t try to cut them to the lowest possible rates. Besides, if your expenses become greater than your revenue, you may run your business into debt. And this could signal bankruptcy, or at the very least, attract the debt collectors to your door. Therefore, to fix your expenses, you may plan all your fixed expenses ahead, and if possible, you can even make some down payment for some, so that in the event of increment or economic imbalance you wouldn’t have to pay through the nose.

Maintain a borderline between personal and business finances

As a small business owner, it might be tempting to use your business funds, sometimes, to attend to some personal emergencies with the hope of paying back. Well, while this in itself isn’t utterly wrong, the fact remains that you need to maintain a borderline between the two streams. Once you’ve secured your business name and registration, the next thing should be opening a commercial bank account for your business, and keeping the account disconnected from all your personal accounts. In the event that you run into personal debt, do not even think about using your business funds to settle your debt; instead, look around for good debt management schemes, like an IVA, that can help you settle your personal debt. Even when you are going through a rough patch as an entrepreneur, you are not allowed to pressurize your business. Always think of it this way: had it been you had no business funds; wouldn’t you find a way to settle your creditors? In the same vein, always tackle your business debts with your business funds only. If you are finding it hard to repay a business loan, you can always find the best IVA around to settle your business funder. After all, IVAs are meant to help you out in times like that – that is the reason the scheme was established.

Prioritize Insurance

As an entrepreneur, insurance is, no doubt, one of the many things you hate paying. But have you ever considered whether you might need it someday? Think of it as financial security for your business and dependents – who could be your ageing parents or children. In the event of an unforeseen disaster or damage to your business, insurance could save your business from going down the rail. Even when you’ve lost all, insurance can help you kick-start again as if nothing had happened.

Create a Savings Plan

Sometimes when people hear the phrase Savings Plan, they are quick to dispel the thoughts of even creating one. On the contrary, what many fail to understand is that a savings plan doesn’t necessarily mean you are just tucking money away. Maybe you didn’t know this, but when push comes to shove, your savings can be your saving grace. If you have money in a retirement account, an emergency fund account, or a savings account, you can withdraw it in the near future when the need arises although you may need the help of a financial expert if you want to withdraw from a retirement account because of the methodic processing and documentation involved.

Avoid redundancies

Redundancies are often the first thing businesses turn to when they want to cut costs. The reason is that, if allowed, it can affect your finances in the long-term. You can avoid redundancies through by taking the following steps:

• Eliminate voluntary overtime
• Recruitment freeze
• Reduce the working week/hours when no production is going on
• Reduce or Freeze pay for all staff (compensate with other things)
• Promote job-sharing arrangements