Small Business Financial Management Tips

Table of contents:

Small Business Financial Management Tips
Small Business Financial Management Tips

Video: Small Business Financial Management Tips

Video: Small Business Financial Management Tips
Video: 6 Tips for | Managing Small Business Finances 2024, March
Anonim

How to manage finances in a small business? Which functions should be left to the owner, and which should be transferred to the accountant? Let's also figure out why most entrepreneurs always have a lack of funds. I want to give you a very practical advice: if you have a small business and a mess in finances, then this principle is key.

Small Business Financial Management Tips
Small Business Financial Management Tips

Top tip for financial management

People are very rational when it comes to money. Money and numbers are solid things. But small business finance can drive an entrepreneur crazy. The reason is that in unorganized business, financial management looks like a flow, that is, every day some money comes in, every day you need to make decisions about some expenses. Flow control is very difficult and it is difficult to prioritize.

Therefore, my advice is this: stop making financial decisions on a daily basis.

A financial game that will change the way you approach money

Try playing one wise game that will completely change the way you think about money. Its essence is that you should only make financial decisions once a week. That is, within 7 days, the money is credited to your current account, but you do not spend a penny from it. I agree, it's not easy, but a week is easier to get through than a month.

By the end of this period, you will have accumulated both money and accounts. The first point: you can finally match them. Second point: when you make a financial decision, forget about tomorrow. Accept the point of view that you only have the money you have today. Do not take into account the funds that “will come in tomorrow”, “are about to come in”, this is an abyss.

What is the use of the game

After playing the game, you will discover interesting things. First, there will be much more bills to pay than money. And this is a common thing, otherwise you would not be interested in financial management at all! Do not think that something is wrong with your business, this is the normal state of affairs. There are always more needs than opportunities, but this is what pushes us up and contributes to our development. Secondly, only with the help of the game will you start to really prioritize. Yes, for a short period of time, but it's a great start.

The first step to financial planning

Take this principle as a rule in your financial activity: make decisions only once a week, and money should not be spent without financial decisions. All receipts for this period are on the account, a list of expenses for the week has been drawn up (try to somehow fit into this amount). And when it doesn't work out, you start to prioritize, think, and make the right decisions.

Get away from trying to manage cash flow, because in this case, you will make colossal mistakes. You do not have a review, you do not see even a small financial picture in a week. By stopping the distribution of funds on the flow, you can see the real picture of your business.

The bottom line is the perfect picture

Ideally, the owner should set the rules for managing the finances, and the managers should follow and control them on a daily basis. I have not made financial decisions at the company for 14 years. I only set, transform and approve the rules, but the specific decisions (what we pay for, where to get the money) are made by the leaders. This is the ideal to be pursued. And moving away from flow control will be your first step towards it.

Come to have a weekly decision point, your company will "smarter" in terms of finances. I'm not talking about you and how you think, but about the specific decisions you make and their consequences.

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