Financial independence and profit gain are things that businesses should aim to achieve. You should set up your small business for success by making smart financial moves to achieve your goals.
Here are some smart financial moves to make for your business.
- Borrow Wisely
A small business loan is a very valuable resource to grow and build your business, but you should remember that paying back the loan is a priority. Apply for a loan you know you can afford to pay back and from trusted lenders only.
- Pay Your Bills on Time, Every Time
It is important that you pay all of your business bills and make loan repayments diligently. Late payment fees can cost your business dearly, and paying small late fees on vendor bills, utility bills and loan repayments consistently add up. You should also ensure that you pay your taxes diligently because paying taxes too late might result in serious penalties.
A good tip is to set up monthly or regular reminders to ensure that all payments are made on or before the due date. Young businesses, especially, have to make sure that all payments and repayments are made on time. The profit-loss margin is thin and avoiding late fees could be the difference between ending the financial year with a profit or loss.
- Spend Some Time in an Introductory Accounting Class
Being a business owner does not automatically make you smart with money. As a business owner, it is advised that you hire professionals to help in certain areas of the business, however, whether you hire a professional accountant or not, you should know the basics of business accounting. Take an online course, or attend classes where you can.
Learn how cash moves in and out of your business and how to manage the cash flow. The more you understand your business finances and cash flow, the better experienced and knowledgeable you are at making better smart money moves.
- Try a New Budgeting Strategy
Chances are with the pandemic and recent economic changes, there’s been a shift in your budget. Maybe less or more. Now is probably a good time to check on your budget and make new changes. Reset your budget and start with a blank page. Keep tactics and tools that have helped.
One good tactic to try is the zero budgeting method.
With this method, you allocate all of your money to expenses, debt payments and savings. The aim is to ensure that business income minus expenditure equals zero on the budget by the end of the month. You can mix it up monthly or repeat expense categories and amounts. It forces you to dictate a purpose for every cent you earn, thus a great way to reset your intentions around saving and debt management.
- Use the 5-Second Rule
Use the 5-second rule when making purchases. Try holding out on a purchase for a while. if you can delay an expense without needing to purchase immediately, it is not priority or you probably do not need the item at all. If the former is the case, consider adding it to a “purchase pause list”; then you can make proper plans to budget this expense and make a purchase when the time is right.
- Check Out High-Yield Savings Accounts
Saving is one of the most popular financial advice out there. It is popular because it is important and efficient, and every business should have a savings account. However, it gets better with high yield savings accounts.
High-yield savings accounts are bank accounts that earn you a higher interest rate for deposits than a traditional savings account. They can also be referred to as high-interest rate savings accounts. A percentage of your monthly profits can be put into a business savings account.
You can grow your business savings with a high yield BizVest’s Savings account. This is ideal for growing your emergency fund or for planned or unplanned expenses.
The interest paid from the savings account is usually added to your balance, which you earn interest on again.