Money: You Have to Manage It
As a small business owner, the most important thing you need to know about Money Management is: "You have to manage it!"
We all know money doesn't manage itself. And it's not as simple as buy low, sell high and you'll do alright. You have to understand how to organize your money: where and how to get it, where and how to spend it, where to put it, and of course, where it actually is right now (and whether or not you really have any, or all of it, on hand).
Financial advice is everywhere you look nowadays. We have 24/7 television channels dedicated to money and finance, a mind-boggling number of reality TV shows about starting companies and fixing companies, and innumerable print and online magazines, blogs and other publications targeting the small business owner.
The problem: with such a vast array of potential resources it's easy to get lost in the details and find yourself diving down rabbit holes that can leave you more confused than before.
What do small business owners really need to know (and do)? Let's take a look at a few of the aspects of money management small business owners and entrepreneurs should be familiar with.
It's important that you have a basic grasp of accounting. Even if you outsoure your accounting to a professional, the more you know the better off you'll be.
Understanding financial reports and processes allows you to make informed decisions that can protect your company from expensive mistakes, and prepare it to step up and take a swing when the time is right.
WHERE DID IT GO?
Following the money is the first step to successful money management. Review your accounts and cash flow regularly. This will highlight areas you can improve on, and help you catch missteps before they send you and your company tumbling.
Are your clients all current on their payment? Are you billing for all the work you're actually doing? Have you planned for when the taxman inevitably cometh?
CHOICES, CHOICES, CHOICES
Know your options. Money, like children, should not be locked in a closet. You have to move it and deal with it on a regular basis. There are so many choices when it comes to saving, spending, investing and borrowing, and each of them has its own pros and cons. Learn about your options so that when the time comes you're ready to act.
If you've got money: you have to decide what to do with it. Are there big payouts coming up, or can you invest it and earn a little interest? Is now the time to reinvest in your business and take it to the next level?
If you don't have money: how much do you need? What would you do with it? You'll also want to know where you can find it, what it will cost you, and what kind of strings are attached.
Knowing what's available out there and being ready to act when the time is right can make a big difference. And, getting the advice of a professional accountant can really help.
It goes without saying that the more you want to grow, the more you should know. And that's why I'll be taking a look at small business money management in detail over the next two months.