When starting your very first business, there can be so much to keep on top of, particularly on the financial side. Most businesses fail within their first year due to poor finances. Here are some rules that you and your business should stick to in order to help manage your finances and become a success.
Track Everything
Tracking and managing your cash flow is everything in business. It’s the money that moves in (income) and out (expenditure) of your business over a period of time. Having a poor cash flow is often why a business will fail, so it’s important to keep track of all your expenses and income.
It can be pretty tricky managing your business whilst handling the finances all on your own. You’ll ideally need to have an in-house accounting team to manage all of this for you. Fully Accountable offers outsourced accounting teams to handle all of this for you if you can’t afford to hire and house your own team.
Stick To Your Budget
Give your business a budget you can stick to. Budgeting is important as it allows you to lay out how much you are able to spend/invest in the business. This could be anything from marketing to hiring more staff. It’s important that you continually reinvest to help your business grow, but be cautious that you can afford to do so.
You want to keep an eye on how your business is performing and adjust your budget accordingly. Review your budget at a set amount of time; could be monthly, quarterly or even yearly – whatever works best for you. You should then make any tweaks as required to ensure you’re not spending more than you should be.
Give Yourself A Salary
Now it’s easy to just continuously put every bit of profit back into the business, but you do need to make a living yourself. It’s easy not to prioritise yourself, especially when you’re first starting out.
Neglecting your own finances can risk your business, too. It can cause you stress and setbacks, and you might just end up falling out of love with the business. By paying yourself a salary, you have a predictable personal budget you can work with, and can reduce your stress and anxiety about personal financial obligations – allowing you to fully focus on growing your business.
Separate Personal And Business Finances
This might seem straightforward but a lot of first-time business owners fail to do this. Separating your income and expenses from your personal and business finances is an absolute no-brainer. It’ll make tracking your business finances as well as your own far easier to work out. It’s quite easy to confuse transactions, which could lead to errors when filing tax forms or just trying to work out your business’s overall financial state.
Avoiding the financial pitfalls of starting your own business can be tricky. When you’re not financially minded it can be incredibly overwhelming. By sticking to these rules, you’ll be setting your business (and yourself) up for success.
