Knowing the state of your business’ financial affairs is one sure way to make sure the cash keeps flowing. Staying on top of your finances means avoiding unanticipated business debt and having enough money to invest in and grow your business.
Manage your accounting properly. Hire a good bookkeeper or purchase an accounting software to help you keep accurate track of your income and costs.Review your costs. Keep track of all expenses of your small business. Expenses can add up quickly, but reviewing them allows you to check where your money goes and adjust accordingly.Make financial projections. Having clear financial projections is important. Your business plan will help you to anticipate and address possible future obstacles.Keep a separate bank account for your business. Mixing business money with your personal finances is a recipe for unexplained losses. Keeping your business’ money separate will help you to keep proper track of your expenses and profits.Make sure to pay yourself first. This doesn’t mean using up all your profit; — you may start with 10% of the earnings. This is a good way to set aside money consistently and to test your profitability of your business. It also provides a safety net for unexpected expenses.Remain prudent. Even though you pay yourself, don’t get swayed by the benefits of owning a business even if you can afford it. Set your salary as low as possible and offer government-mandated benefits only. What you save now will offer you more flexibility in future lean months.