Starting a small business is indeed a lot of challenges in the early stages. Not only in matters of capital, you also have to be good at managing existing financial management. Especially if you are new to running this business.
Actually there is an easy way to make this financial management. One of them is by maximizing digital bank services such as Bank Jago which has a unique feature called Pocket Jago.
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In addition to maximizing technology, here are some tips and brief guidelines that you can apply when running a small business so you don’t take one wrong step.
Financial Management Tips for Small Business
1. Separate personal finances from business
As the easiest first step in managing business financial management, it is to separate personal finance and finance for your business. This method can be done by creating two separate accounts.
It is feared, if your personal account and business results become one you will not know which money is for business and personal.
It is possible that the money from your business will be used for personal purposes. After the account is created, you must also commit not to mix the money back.
Thus, financial management will be more easily controlled and used for important purposes in the future and to develop the business.
2. Pay all bills on time
Just like personal finance, in running your business you should immediately pay off the bills you have. For example, electricity, water, and internet bills.
In addition, other payment bills are also important to note. Some of them are credit card payments and other loan payments.
Usually, if you don’t pay all of these bills on time, you will get a late fee penalty. Although sometimes trivial, it can be quite a large amount.
Therefore you must pay on time to avoid these fines. This is important to note so that the company’s finances can be stable and can be used for other purposes.
3. Calculating profits clearly
Profit or profit is the main goal of an entrepreneur setting up a business. However, in reality there is still a businessman who when calculating profits is not done properly and correctly.
In fact, this is very important to measure the extent to which your business can run well. When calculating this profit, make sure all the costs have been calculated. Includes entry and exit fees.
Calculating profits sometimes involves cash and non-cash in your company’s account. Don’t forget to also calculate depreciation costs, tax fees, and other interest. From there you can see how much the net profit from your business is for a certain period.
4. Pay attention to contractual agreements with third parties
In running a business, of course you can’t walk alone. You also have to involve other parties so that the business grows and gets bigger.
With this third party you can be helped both in the production process and when making decisions. Especially in financial management for your business.
You can make this third party either as a supervisor or fully surrender business financial management.
On the other hand, if you use the services of a third party, the expenses may increase. Therefore, you must be observant when signing contracts, be it with these third parties.
5. Using profits to develop the business
The difference between successful entrepreneurs and those who are mediocre actually lies in how these entrepreneurs enjoy what has been achieved from their hard work so far.
It won’t hurt you to enjoy those rewards for activities you may find enjoyable. However, keep in mind that you shouldn’t spend that money just like that.
It would be better if the money from the operating profit achieved to develop the business becomes bigger. For example, by buying new products for resale.
Or, you can also use it as capital to invest in other forms. For example by investing in stocks or mutual funds to multiply profits.
6. Planning a business budget
Another guide when managing financial management for small businesses is to make sure you have a detailed budget plan. Why is doing budgeting so important in small businesses? This is none other than to measure the limits of the extent to which performance and efficiency has been carried out over a certain period of time.
For example, for financial planning on a daily, weekly, monthly or even yearly basis. For an annual period, this can be done if your small business has been running for quite a long time.
With this budgeting it will be easier for you to control expenses that have been previously estimated. You can also make this budgeting plan a future evaluation material. Does it increase or decrease in terms of expenditure and income.
7. Oversee financial cash flow
Finally, in managing the financial management of small and medium businesses, make sure you always keep an eye on financial cash flow. Managing finances is not easy. You also have to be really observant to see where the business financial flows have been used so far.
Usually many people use the services of administrators or auditors in controlling cash flow and setting financial standards properly. However, using the services of administrators and auditors clearly adds to your business expenses later.