Managing the finances of any business is a challenge especially with so many costs involved. The following article provides useful Financial Management Tips for Start Ups to ensure that your new business manages it finances in the right way.
Financial Management Tips for Start Ups
1. Accounting System
Most businesses now have electronic accounting systems with accounting software such as Quickbooks offering accounting software solutions to help you organise your business and meet HMRC requirements. There are also various accounting apps available that can integrate into accounting software and support the management of financial tasks. Banks also offer various banking apps for small business owners to manage their finances efficiently.
2. Have a Business Budget
Having a budget for your business will help you have a financial plan in place to help your business grow safely. This will help you manage cash flow and business expenses to ensure that your business operates efficiently. Having a buyudghet for your business will be important so you can manage your finances in the right way. This will include provide a guide for making important financial decisions such as growth plans and use of capital expenditure to make improvements in your business. Having a financial budget also allows you to forecast your sales and costs providing an overall view of how your business is going to perform financially
3. Managing Debts Effectively
Many businesses operate with debts which may have involved the finance to help get your business started or a loan for expansion plans. Operating with a debt is a normal practice but it is important that debt is managed effectively. It is important to know the different finance options available and always make sure that you fully understand full cost of borrowing. It is important to ensure such outgoings are included in your budget.
4. Keep your Business and Personal Accounts Separately
It is always advisable to keep your personal and business bank accounts separate. This ensures that your business expenses are kept separate from your personal outgoings. It will also make your tax returns more organised and easier to prepare and keeps the financial performance and expenditure of your business transparent.
5. A Company Credit Card
A company credit card can be a great way to track all your business expenditure whilst also keeping your personal and business expenses separate. For end of year accountancy purposes, a business credit card will make your end of year tax return that much easier. Some credit cards also reward spending whilst providing a great way to establish a good credit rating for your business.
6. Manage your staffing costs effectively
Staffing is the biggest cost any business will have. Paying wages, holiday pay, National insurance and taxes can be a big expenses especially if you have a lot of employees. Of course having staff is essential for you’re a business and can even benefit your business if you hire and employ the right people. There are ways you can reduce labour costs. Consider flexible working and 0 or 20 hour contracts. You can always scale up hours to suit business needs but if you employ all staff on 37.5 hour contracts then should business be slow, you still have staff on a full time contracts. This is particularly popular in the retail and services industry where staff are taken on low hour contracts so there is flexibility to scale up when necessary but the fixed staffing cost is low and manageable.