There are many different challenges associated with running a small business, from time-management to managing employees. However, the biggest challenge seems to be money–so much so that many small business owners have hired small business consultants to help with their business. While that’s a good thing, it costs them even more money.
There are quite a few do’s and don’ts and just as many mistakes made by small business owners when it comes to managing their finances. Below, you can find a few tips for helping you manage your money properly.
You can’t expect to have your finances in order if your business itself is unorganized. From your bookkeeping to the document scanner services you use and from your payroll to your inventory, everything should be organized and documented–not only in your place of business but in your finances as well. For example, keeping all of the bills for these services in one place is important, as is making sure that you couldn’t get a better price somewhere else for those same services.
Don’t Mix Your Personal Expenses with Your Business Expenses
One of the biggest mistakes small business owners make is mixing their personal and business expenses together. The reasons for keeping them separate are many, such as tax issues, personal liability, and accounting records becoming jumbled, just to name a few. While it may be tempting, never use your personal accounts or money to cover business expenses.
The best way to avoid mixing the two is to have very clear personal and business budgets. One should never cross with the other, unless you want a mess on your hands later down the line.
Pay Your Bills On Time, Every Single Time
Just as you do with your personal bills, it’s important to pay your business expenses on time as well. Late payments on credit card and loan payments can cost you dearly, something you don’t need if your business is already struggling financially. However, paying the smaller late fees to vendors or later electric bills or penalties for missing tax deadlines can add up to be a pretty penny as well. Paying your bills on time not only ensures your business credit is good, it ends up saving you more than you think in late fees and interest as well.
Negotiate with Vendors Before You Sign a Contract
It’s never a good idea to just pay what your vendor asks for when it is possible to negotiate before you sign the contract. Most vendors will respect your bargaining and may offer you a discount. Even if they don’t, at least you will know you tried. Before you sign a contract, make sure you look at the late fees they say they will charge and their interest rates so that you know exactly what you’re in for if you have to be late on a payment. Sometimes being given an extra 30 days as a grace period can save you more than you think.
Buy Used and Refurbished
You don’t really have to have brand new equipment for your business if you can find good used or refurbished equipment for a lesser price. Make sure to take advantage of mail-in rebates, coupons, and other stuff offered for office supplies as well. While it may not seem like a lot, a little bit of savings can quickly add up to quite a bit of money if you do it right.
These are just a few of the top tips out there for helping you manage your finances as a small business owner. Remember, if you live frugally in your personal life, why would you handle your business life any differently?