Starting a business takes a lot of hard work and dedication. Yet, it’s nothing compared to managing the business once it’s up and running.
Did you know that 50% of small businesses fail before they make it to the end of their fifth year? Most often, this comes down to poor marketing, poor leadership, or the business owner’s inability to manage business spending.
But don’t worry, you don’t have to fall victim to the same fate. You can learn how to keep your company in the black so you can build your empire and create wealth.
We’re here to help. Keep reading for a quick guide on finance management.
Monitor Your Cash Flow
First, you need to take a look at your earnings. How much revenue does your business bring in each month? Just as importantly, you need to identify how much your business spends each month and where this money is going. This includes:
- Employee salaries and benefits
- Utilities and services
- Insurance
- Operational costs
- Marketing
- Consulting fees
- Etc.
Create a cash flow report to see your numbers in black and white. This will help provide clarity so you can more easily manage business spending.
Explore New Financial Management Methods
Implementing organization is one of the best solutions for finance management. For example, you need to keep your personal finances and your professional finances separate, no matter how small your operation is.
For larger operations, we recommend companies use corporate cards. All business finances can be processed through these corporate debit cards to keep your expenses organized. It may also help you delegate by giving each department head their own card with restrictions on how much they can spend each month.
Work With a Financial Consultant
If you’re having a difficult time learning how to manage business spending, it might not be a bad idea to hire a financial consultant. Yes, this will be an added expense to your budget. However, their expertise and experience can help you learn more about how to budget and save money.
Furthermore, they can set you up with a long-term financial plan and teach you how to use software to manage your budget yourself. You don’t necessarily need to hire them for recurring services.
Cut Costs and Find Better Deals
Finally, learn how to limit how much your business spends by auditing your expense report. Identify services and purchases that aren’t necessary for the betterment of your business. This includes marketing plans that aren’t giving you a high return on your investment.
It’s also important to shop around for the best deals for service providers. For most businesses, this includes:
- Dropshipping companies
- Marketing agencies
- Internet and phone providers
- Commercial property providers
- Insurance providers
- And more
Essentially, you can manage business spending more efficiently by taking the time to find more affordable options. If this means moving to a smaller and less expensive location, it could be the best thing for the future of your business.
Can You Effectively Manage Business Spending?
As a business owner, you are a jack of all trades. You’re a manager, a marketer, and a salesperson. Your duties also include learning how to manage business spending. We hope this guide helps provide insight into your finances and how to save money.
And remember, there’s nothing wrong with working with a professional. In the meantime, look through some of our other articles to find more small business tips and financial guidance.
