How do you manage your budget so as to increase your sales volume and establish yourself as a successful business owner whose influence cuts across North America, South America, Europe, Asia and Africa?
Why is managing your finances important in growing an enviable business in this 21st century?
As a business owner, the key to success is financial management. It could be that you have the best product or service on offer, and you may have executed the perfect marketing plan, but unless you manage your finances then you are destined to fail.
Just because you are an expert in your chosen sector doesn’t automatically mean that you are confident when it comes to managing a budget. You need hands-on training on the best budgeting techniques that can help your business grow.
We want to make sure that your business is a success. We don’t want to see it become just another statistic.
A report from the U.S. Bureau of Labor Statistics shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.
If you want to see how you can manage your budget as a business owner then check out these 5 strategies below:
1. Consider how you send funds abroad
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If your business sees you sending money abroad then you are probably already aware of the financial impact that this has. If you are using a traditional bank to do this then the chances are that your expenses are already mounting. Each time that you are transferring money overseas you will be paying:
Foreign transfer fees
This is the fee that you are charged for sending money abroad. It could be a set fee that is charged or it could be a percentage of what has been sent. With traditional banks, it is possible that both you and the recipient will be charged.
Exchange rate
This is a charge that is often referred to as a hidden one. Banks and the providers add a percentage mark up to the exchange rate which sees them making money and your recipient losing out. You need to shop around and find the best rate so that more of what you send actually reaches the intended destination.
The key takeaway here is that your bank is not necessarily the best option to take. It’s a good idea to research the different options for sending money internationally before you decide which one to choose – click here to check the fees from the different providers.
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2. Having an emergency fund is a good way to manage your budget
If you manage funds in your household, the chances are that you have some sort of emergency fund. This is the money that you put to one side anticipating that the unexpected can always be expected. Things like when a boiler breaks down or when your car needs an emergency repair. This often happens when you fail to do routine car maintenance semi-annually.
Having an emergency fund for your home means that you have these situations covered. The same should apply to your business.
There is no doubt that your business will experience a slow period at some point when you fail to manage your budget. When it does, then you are still going to have fixed costs and expenses that need to be met. By using the good times to put money aside, you can operate safely in the knowledge that when a slow period hits you can weather the storm and come out the other side.
It is important to remember that an emergency fund doesn’t last forever unless it is topped up. Ensure that you are adding to this on a regular basis and, should you need to access it, ensure that you replenish it as soon as you are able to. If you would like to know how much you need to save in your 30s for your emergency planning fund, check out this article.
3. Don’t be afraid to pay for a professional
We would have a guess and say that you are not an accountant. Unless, of course, you have just launched your own accountancy service that is. Accountants are experts in their field but many business owners, certainly in the early days, try to avoid using them. Why? They see accountants as an unnecessary expense. Many business owners wear different hats and take on numerous roles. An accountant shouldn’t be one of them.
By paying for a professional, you can be sure that you are getting the right advice. It could well be that an accountant can save you money. Even if they can’t, they can ensure that you are complying with a whole host of complicated rules. You may want to work with a certified public accountant that has professional indemnity insurance coverage. This means that you and your business are protected.
If you try and spin every plate yourself and one of these drops, there is only yourself to blame. If you are paying a professional and things go awry, you can be confident that you have some legal recourse.
4. Plan for your tax
Do you want to be paying tax at the end of the year? No, neither do any of us but as the saying goes, there are only two things that are certain in life and one of these is taxes. The problem that many business owners have with tax is that it seems to take them by surprise each time that the payments come around. This really shouldn’t be the case.
You know that you’re going to have to pay your taxes so you can help yourself during the year. Learn how to prepare for the tax season like a professional by putting money aside each month that will go towards your payment. This means that at least there will be some money ready to clear your tax bill and you are not scrambling around trying to get your hands on it at the last minute.
Linking back to the previous point, using a professional will ensure that you are only having to pay the tax that is absolutely necessary. An accountant can be your friend here and protect your pocket.
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- Tax Laws and How to Apply for Federal Tax ID Number
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5. Make sure that you’re getting paid
You may have just delivered an exceptional product. You could have just provided the best service possible. You may actually be quite proud of yourself for what you have achieved. That’s all well and good, but what is important to your business is that you are getting paid for this.
Once you have issued an invoice, you need to have a process in place that ensures that you are getting paid and paid on time. When payments are late you need to be clear with how you are going to deal with this and how you are going to chase them up. There are various accounting software packages that can help you do this. Most cloud-based accounting software can help you manage your budget better.
Cash flow is the lifeline of your business. If you are not paid on time, you can’t meet your responsibilities. Ensure that your business doesn’t suffer just because someone else is unable to manage their own finances.
