Let’s face it, managing finances for your start-up doesn’t scream ‘excitement’. If it does, then lucky you – keeping on top of the books will be a cinch. But for most of us whose skills lie elsewhere, the thought of tracking invoices, managing cash flow and creating budgets can have a snooze-inducing effect. But avoid the money matters at your peril – healthy finances are essential to make a success of any small business. Here’s some simple tips and tricks to show you how to get a handle on it.
Think about money right from the start. No, not how you’ll spend the fortune you’ll make from your awesome business, but how much you need and where you can get it from. Tech.co advise asking yourself these key questions before you go to the bank – do you have a good credit score? Do you know someone who could be willing to invest? How much of your own money could you invest in the business? Then put together your budget in an Excel spreadsheet to work out your forecast.
Nowadays it’s easier than ever to keep track of the bottom line, even if you’re not a financial wizard – you can sort it all out on your laptop. Top online tools include BodeTree, a specialized small business service which provides daily updates of your finances – including a ‘cash tracker’. If you’re prone to shoving receipts into a drawer for months on end, then get Shoeboxed. It’ll turn your mounds of paper into lovely organized online data, including expense reports and mileage.
“Cashflow is vital!” says Ebonie Allard, of Entrepreneur Enabler. In fact, it’s often where lots of small businesses fall down. If you’re waiting too long to get paid on work already done, the money fairy won’t be able to keep funneling that moolah forward. So how are you supposed to guard against it? “Remember the importance of contracts,” says Ebonie. “Make sure you have clear terms & contracts detailing payment terms. You can even get paid up front – don’t be afraid to ask for payment ahead of delivery.”
As a small business owner, it’s tempting to try and do everything yourself – that way, you’re saving cash, right? Wrong. Spreading yourself too thin and trying to be everything from marketing director to admin assistant to financial officer can have a detrimental effect on your business. Much better to look out there for one of the free business mentors available who can give valuable advice on managing finances is a great place to start. Mentors Me offers free access to a huge list of UK business mentoring organisations – so take full advantage.
Just because you’re small, doesn’t mean you can’t look after yourself the way big businesses do, with a raft of great benefits. “Treat yourself as an employee too – i.e. with life cover, income protection and a decent contribution to a pension,” says financial advisor Lisa Conway-Huges of Misslolly.
To find out more tips about managing finances, check out the advice our Finance Director Andrew Johnson gave smallbusiness.co.uk