Managing business finance can seem like a daunting task at first.
It doesn’t have to be.
Once you get a few processes down and understand the basics, it becomes surprisingly easy to work on your business finance. It, however, can take some time depending on which tools you use and the size of your project or business.
Young entrepreneurs are the new generation of innovators. They make the world run the way it does. Their contribution to the modern economy is simply irreplaceable. Without budding entrepreneurs, we’d not be here.
It’s important, therefore, to teach them how to best manage business finance. It’s easy for an entrepreneur to feel lost when it comes to the finances of the company. Even if they have the most brilliant idea in the world, a business doesn’t survive on ideas alone. Managing the finances and avoiding any cash leaks are extremely critical aspects to succeeding in any type of business.
For some, applying for the best business loan helps them to move forward.
SBL Singapore offers a wide range of business loans that can help entrepreneurs expand their businesses or fix their problems. For example, we offer Seafood Supplier / Wholesaler business loans, Fashion / Clothing Retail business loans, Restaurant / Eatery business loans and more.
Without enough funds, many entrepreneurs end up wasting precious time and making bad decisions.
Singapore ranks among the world’s leading places in terms of cultural support for entrepreneurship, startup opportunities, process innovation, absorption of technology, and more. It’s the entrepreneurship haven in many ways.
A new business is not a very complex organism. With a few basics and processes, any young entrepreneur can bootstrap their financial decisions in-house without having to rely on third parties or without having to hire financial experts.
In this article, we’re going to look at the five best ways of managing business finance in any new venture.
Mixing your business finances with your personal finances is the quickest recipe for disaster. We’ve seen many companies, especially bootstrapped ones, starting off by receiving payments or making payments using a personal bank account.
This is not ideal.
It can wreak havoc when you have to put together the papers for tax purposes. It also makes your clients or vendors less interested in working with you. Keeping both finances becomes virtually impossible and you become likely to fail on both fronts: managing your personal expenses and managing your business income as well as its expenses.
Long story short, though it might sound like a good idea when you’re just starting out, it will become a nightmare if you don’t keep your business finances strictly separated from your personal finance from the get-go.
This is not something you want to postpone.
Tips to keeping your business finances separate from personal or other finances (for example, finances of another business):
1. Always start with a fresh bank account and credit card for your new venture. All incomes from the business go directly to this account and all expenses come directly out of it.
2. Always track and manage your business spending. Make it a habit to audit bank statements either weekly or monthly depending on business activity.
Don’t be shy to ask for advice. It’s highly recommended to get professional guidance. Things that stump you are extremely easy to do in many cases. Ask your questions that are apparently baffling and receive answers that straighten things out.
During any conversation with a professional, you’ll find that not only is it fairly easy to solve a business finance problem associated with a new venture but there’s a nifty trick you never thought of.
You might also learn something new along the way.
1. Scan your existing friends and family circle. Is anyone a financial professional? If yes then shoot them your queries. You can also compensate them for more rigorous work.
2. There are plenty of internet forums and portals for young entrepreneurs, especially on platforms such as Facebook and Reddit. These also include financial experts. You will also find other entrepreneurs here and their stories of how they solved the problems you might be having today.
All your financial data should be handy and frequently updated. It helps you file tax returns at the end of the year without going through last-minute frenzies and wasting a ton of time just to remember things and finding records.
Keep financial information tracked and updated regularly. This will help when you need to apply for a business loan.
1. Keeping a database of all expenses and incomes right from the get-go.
2. Having realistic projections ready for investors.
3. Having all money in and money out data in a sortable spreadsheet to quickly check certain entries or to calculate sums.
Long gone are the days when half a dozen accountants were needed to start any business. We’ve long left manual accounting behind. If you’re still not investing in good software and relying on manual supervision or management then you’re actually taking your business towards loss.
Loss of money, time, or both.
Contrary to popular belief, you’re bound to invest more time and money in the long term if you try to cut corners and save up by not purchasing good accounting software in the beginning.
It’s not just about accounting either. You might need software for inventory management, tracking payments, or something entirely different. Try between different software trials to choose the right type of software for your needs.
It’s extremely important to establish a hierarchy in a workplace. When working with friends or colleagues it’s often not a priority to set up positions. But that’s a grave mistake. Apart from managerial decisions, you also need to divide the responsibility to manage funds and payments to avoid any mess or disarray later on.
It can be quite disconcerting to have the managers not being able to veto important decisions, including monetary ones, just because hierarchies weren’t set up. This can cause the business to suffer big time.
Trying to set up hierarchies in troubled times is always seen as a desperate measure. That’s why you should start with hierarchies when everything is sunny and cheerful.
One thing that entrepreneurs should do their best to avoid is delaying their employees’ salaries. This will greatly affect their mentality and motivation for work.
Trust is hard to gain and easy to lose.
For businesses that are facing financial difficulties due to COVID-19, you can apply for a business loan within minutes here.