Financial management is not only for large-scale businesses. The efforts of small and medium businesses to manage their finances can open up opportunities for businesses to be more successful.
Moreover, since the pandemic, many people have decided to set up businesses or businesses on a small scale. But not all of them can thrive or succeed. There are various influencing factors, but this article will discuss further the role of financial management.
Managing Small Scale Business Finances
One important factor in the success of a business or business is its management. A well-managed business or business will run smoothly, and even thrive.
Likewise with the opposite, without good management efforts, businesses become stagnant and even fail. There are various good benefits if you add knowledge and knowledge about business before going into business.
In this article, we will discuss the management of small and medium scale businesses, especially in financial management.
Here are some things to pay attention to in managing small or medium-scale business finances:
1. Separate Personal Finance from Business Finance
The very important thing to understand and do is to separate personal finance from business finance. No matter how small the scale of your business, always separate company finances from personal finances. The goal is to avoid using company money for personal gain, and vice versa.
As much as possible use different places or accounts for company money and personal money. After being separated, you must also commit not to use company money for personal gain if it’s not too urgent.
2. Doing Planning and Budgeting
Furthermore, the need to make a financial plan or budget. You need to plan and budget so that the company’s expenses do not swell.
Budgets and plans for small and medium scale businesses can be prepared every month or even every week. Making a budget will also help your business manage your income and expenses so that your business can grow.
3. Make Financial Records
All types of financial transactions carried out by the company should be recorded. By having complete and accurate records, this information can be processed into financial reports.
Financial reports are very useful as a source of information about the state of the company, and as a basis for decision making and planning.
You can take advantage of business management apps that already have financial recording features so that everything is recorded more easily and neatly.
4. Monitor Cashflow or Cash Flow
You need to record all transactions, both income and expenses, and then compile a cash flow report. The purpose of this oversight is to prevent cash leakage, or where cash is not known to have gone.
You don’t need to worry about having to bother recording and keeping all transaction records, take advantage of apps with financial features to help you.
5. Turn Profits to Grow Business
The mistake that is often made by small or medium scale business actors is to take all the profits owned by the business for personal gain. Thus, the amount of company capital does not increase and it is difficult to develop.
Supposedly, part of the profit is re-circulated to increase capital. Put aside for a moment the desire to get as much money as possible for personal gain. At least set aside 10% of profits to increase capital so that your small business can continue to grow over time.
6. Set up a Company Emergency Fund
Another thing that is no less important to pay attention to is the emergency fund. We will never know how the business will run in the future.
This emergency fund should be prepared even from the beginning of the business. The amount can increase along with the increase in company profits. Do not use these funds if everything is still running normally and is under control.
7. Take advantage of technology
In this era, you will be far behind if you don’t take advantage of technology for the continuity of your business. In the context of this discussion, use technology that can help you manage the finances of the small and medium scale companies that you are running.
One of them is the Krealogy app which has various features that can be used to record all financial transactions. You can also download financial reports according to the desired period with this app!
Some of the things above should be applied to your business financial management. With small changes, everything will have a positive impact on your business in the long run.