Managing finances well is one of the most important things when having a business. If you are not skilled enough in managing finances getting ready for your business will have difficulty in developing. A healthy business needs good financial management.
The amount of income and expenditure must be balanced, not only managing the finances of business doers also need to understand the importance of managing cash flow and how to maintain cash flow so that it remains smooth. Unfortunately, there are still business people who underestimate financial management in their business.
If you want to have a business that runs smoothly and is more profitable, then make sure at least your company’s financial management is also quite good.
Therefore, you need to know some tips and tricks for managing money in business as follows:
Optimal Ways To Manage Money in Business
1. Make an Annual Evaluation
Making financial evaluations is an end in the flow of documentation in one period. There are 2 reasons why financial evaluation must be conducted.
First, financial evaluation will show a company’s achievements over a period. The evaluation can provide information whether the steps taken are correct or not. With evaluation also the financial condition for a period will be seen clearly.
Secondly, financial evaluation can also show the pattern of company spending in one period. If there are many shortcomings, then you can take corrective steps in the next period.
2. Determine The Term
To manage finances better you need to separate based on time period. Starting from making a general plan for business with a program that will be carried out for one period. Then, make a detailed requirement of each program.
If you have made a detailed program, divide it into several categories of implementation time. Starting from daily, weekly and monthly expenses for the short term. Expenditures for the next 1 to 3 years for the long term.
3. Create an Income Plan
To start a job requires a good plan. However, if the planning is not carried out fully, the results obtained will certainly not be maximal. It is not impossible that it will cause losses. Therefore, to manage finances a plan is needed to regulate income.
Think about which products you can produce for your company. Determine how much you can produce, look at market segments and confirm your sales target. Don’t forget, formulate a marketing strategy more mature so that you can reach the target as planned.
4. Separate Private Property and Company Property
One thing that often makes business people fail in business is to consider the money earned from the business as personal money. This perception is not wrong if the business belongs to an individual. This habit is what sometimes makes the business ultimately fail. For example, the costs required for production are used to finance personal needs. This is what makes these businesses lack of capital.
The thing you can do is to keep track of your books to help you see the company’s financial cash flow and of course with these books you can separate from personal and business needs. In addition, you can also separate personal and business finance using a bank by creating a business account and a personal account. By doing this, all transactions from your business have clearer documentation.
5. Manage Cash Flow
Earlier we discussed a little bit about the importance of better managing cash flow. A business certainly needs funds to keep it running. These funds are used to finance the business for purposes such as funding employee salaries, production needs and others. No matter how much income your business receives, but if most of the income is in the form of receivables, then over time the business operations will experience problems. Therefore this is the importance of managing cash flow in a business.
When managing finances make sure all records are matched with purchase receipts or other proof of expenses. After recording expenses, you must also document the income. Both of these fund details can later be used to make a balance sheet. From making the balance sheet, you can find out how good the financials in the company are.
If the cash flow is smooth, you still have to do regular and periodic monitoring. Try all bills are paid so that it does not become a problem in corporate finance.
6. Understanding Accounting
When you want to manage finance in a company, you need someone who clearly understands finance. For that, businesses need to understand accounting or at least find an accountant who is truly an expert in this field. By understanding accounting, it is expected that owned businesses can have better financial management.
7. Prioritizing Company Needs
Remember this theory that income must be greater than expenditure. Not only that, business people must also be careful in choosing what is needed by the company and what is not. This is in order to reduce company expenses, too much expenditure compared to income will make cash flow unbalanced. Therefore, try to prioritize the needs that are indeed needed by the company.
For example, such as company expenses for office rent. This you can try to find an office with an affordable and comfortable price, no need to look for a fancy office.
8. Set aside Company Revenues For Business Development
This does not mean that you cannot enjoy the benefits of your business, it would be wise if you can manage the profit funds to be your business development funds. One of the important tasks of financial management is to keep the business growing and developing. The more developed the business is undertaken, the greater the income received by you. Therefore, set aside a portion of your business income to develop your business.
9. Prepare an Emergency Fund
Every business that is run will certainly not run smoothly as all that has been planned. The existence of one or two problems will certainly be experienced by us, such as the decline in turnover due to the emergence of competitors and several other things that require you to think hard to solve it.
One way to anticipate this is to have an emergency fund. These funds can later be used for purposes that are urgent . If you face a problem that makes a big loss in a company, you can use this emergency fund to keep your company stable and you can continue to run the business.
Well, the 9 ways above you can apply to manage both your company’s finances and for your business. The development of companies in every corner of the region that is experiencing a rapid increase will also be your obstacle, but if you can manage finances well.