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One of the most exciting things about starting your business is money. Especially when you see the sales from those first orders trickle in. But the thing about money and finances in a small business is that it can quickly get out of control.

It’s all quaint and dandy until you lose track of yet another invoice and you’re spending more time trying to keep track of all the payments and expenses than on the actual business.

So we’re coming at you with a couple of tips to help you manage your small business finances: 

1. Keep Business and Personal Accounts Separate

It’s important to open a separate business account. 

For starters, you don’t want to mix business with pleasure. It can be easy in the beginning stages where the money rests all in one account, but as the months go by, things are going to be hard to keep track of. 

You don’t want to struggle with figuring out the full extent of your personal stash.

Adding on to this point, you need to pay yourself a salary. 

Don’t neglect all the work you put in. When running a small business, it’s easy to become invested to the point of overworking. As an entrepreneur, you'll be wanting to put every cent back into the business but you shouldn’t forget about yourself. At the very least, you need to pay yourself enough to support a decent lifestyle. 

2. Track Your Invoices and Bill Payments

Just the other day you realised with horror that an invoice you sent three months ago remains unpaid to this day. And you never followed up?

Or worse, you forgot to invoice a customer because you just have too many? On top of all this, you just received notice from a lawyer for an unpaid bill.

Okay, so the good news is that your business is growing. So yay, good for you!

Which also means you need to create a really good system or a way to track all these incomes and expenses. 

For both invoices and bill payments, you want to create a proper set of steps to follow - or a really good system. 

A good system takes a lot of effort and time. Time that you would rather devote towards the actual business. 

Which is why you definitely want to leave your finances in the hands of experts. 

3. Set Financial Goals 

The first step is to create projections for a target you want to hit every month. 

The second is to ensure that you set aside time every week to see if you’re on track to meet your goals. 

If you’re cashflow negative, what are the extra measures you need to take going forward? Is there an expense you can do away with or are you spending too much time on the unnecessary stuff? You must be frugal where you can - do you need that third $5 coffee today?

Or, if you’re cashflow positive, what steps can you take to add even more value to your business? Can you add someone to your team? Or are there are a couple of tasks you can outsource such as marketing and finance? 

4. Make Plans for an Emergency Fund. 

We don’t really need to say much after the whole fiasco that’s been the pandemic. Which is why you need to make a list of everything that you’d need to manage monetarily when the time for an emergency comes. And how much money you’ll require. 

It’s always great to have a stash to fall back on so that you're not too worried.

Start small - work out what it takes to run your business for one month and aim to put that aside in savings and not touch it. Over time, add to that and build up to three months of running expenses. 

5. Don’t Struggle with Your Compliance. 

Right from billing the client, ensuring that you’ve received all payments to tracking and recording the flow of money, you still have to keep aside the right amount for the range of taxes in your business.

You don’t want to struggle at the end of a business year and spend days breaking your head because your accounts just don’t make sense. After all, who remembers the reason behind the $20 you spent in November?

Time is of the essence as a small business. And managing small business finances isn't the easiest.

Keeping track of where and how your money comes and goes can be difficult. Sure, it’s easy to do it yourself in the beginning. But when the business starts picking up, the easy stuff can quickly become chaos and before you know it, you’ve lost track of an invoice.

At Talo, we aren’t just experts to whom you can outsource your financials. We want to see you succeed, accomplish more and become your work family. Let us help you streamline, move on to a simple accounting system (XERO!) and make better decisions.

There for you always,

The Talo Financial Team