‘Save Money and Money will Save you’, the saying has never been proved wrong. When tough times come, people help you but money will save you. And for a businessman, effective and efficient management of their finances is very important for the growth and success of any small business. One easy way to do this is to hire a dedicated accountant or bookkeeper right away who can help you track your cash flow and generate reports. However, for most young businesses, managing finances can be a challenge. Especially, when you don't have a lot of experience with managing business finances, it can feel like a chore and you could be slipping into bad financial habits that could one day harm your business.
Below are few points that can help young businesses save their operations amid the pandemic:
- Boost Your Emergency Funds: You cannot control anything good or bad. When things go wrong, money is the only saviour and when it comes to emergency, most things are unpredictable and difficult to manage. So, save as much as possible, maintain a budget, avoid expenses as much as you can. Situations like coronavirus pandemic have already impacted the global economy which could leave long-term repercussions on the industry and businesses. In such a scenario, having an emergency fund can save businesses from collapsing.
- Monitor Your Expenditure: It is essential to keep a tab on where you spend your money, especially with small budding businesses. While your expenditures can add up quickly, monitoring or reviewing what you spend and where you spend will allow you to analyze the input and output of where your money goes.
- Invest in Growth: To boost the growth of your company, investment at any time is a good opportunity. While investing is always recommended, ensure that your investment decisions are strictly based on your financial goals, risk appetite and liquidity requirements. When in doubt, consult your financial advisor and don’t pay heed to rumours.
- Secure the Cash Inflow: Whether your business is big or small, you should have to get into the habit of asking clients for a deposit prior to providing services, especially if the work also involves product sales that have to be paid for by you in advance. This will in most cases ensure that you have enough funds and will assure that your customers will not leave after taking the service.
- Avoid Using Your Savings Until Necessary: Small businesses tend not to have enough capital to get themselves through the startup phase. To prevent this, it is essential that young businesses have three months’ living expenses saved plus the amount you are expecting to need for the first three months’ business expenses. Plan as if you expect to receive no business revenue for the next few months and definitely avoid using your savings until necessary.
When it comes to saving, Sky is the limit. There will always be business issues that need to be addressed today, but when it comes to your finances, you need to plan for the future, this is the only way one can save businesses.