Managing your small business finances is important to the success of your business. If you make the right financial decisions for your business, you could reduce unnecessary spending and increase earnings.
This guide will give some tips on how to make better financial decisions for your small business, including:
- Planning for better financial decisions
- Making better financial decisions for your business
- Keeping track of your financial decisions
Planning for better financial decisions
If you’d like to know how to make better financial decisions for your business, you’ll first need to look at your current business operations. By assessing your current strategy and decision-making process, you can understand which decisions you’ll need to reconsider.
Start by examining your current financial situation. Determine your business expenses and income to find your cash flow, or the cash going in and out of your business. Compare your client list and invoices to your cost of daily operations. You can put this information into financial statements, including balance sheets, income statements, and cash flow statements.
You’ll also want to see how much of your income will likely go towards taxes.
Once you look at all your finances so far, you can see which decisions may need improvement. If you get all your business finances together, you can use this information to make better decisions.
Making better financial decisions for your business
So how can you make better financial decisions for your business? First, be sure to weigh each decision rather than making decisions quickly. Here’s a few tips you can follow when making business decisions.
- Determine your current earnings and predicted earnings
When considering financial decisions, first consider your business’s financial situation. Once you’ve put together your business finances, you’ll understand how your small business is doing so far.
Start by using your financial statements to determine your current earnings. This will help you understand what financial decisions have been hurting your business and what money you have to make financial decisions.
Then, use these statements to estimate your projected income and expenses. How much have your sales increased? How much might they grow in the next year? This information can help you plan for future financial decisions.
- Budget for your small business
You could improve your financial decisions by establishing a budget for your business. A budget will help you focus and limit your business spending.
When making financial decisions, consider how much disposable income you have to grow your business. Consider how much excess cash you have. If you want to invest in something for your business, consider how long it will take you to pay off this expense and if you’re earning enough to pay for it.
For example, if you want to grow your business through paid promotions, you’ll likely want to put together an advertising budget to know how much you could spend on advertising.
- Stick to your business plan
When considering financial decisions, think about how the decisions progress your business plan. Focus on your small businesses short-term and long-term goals. If this decision will help your business in the long-term, and you can afford it with little risk, then it may be the right decision.
Consider which financial decisions will be best for your business growth. Set clear goals for your business and stick to them.
- Eliminate waste
Another way to make better financial decisions is by looking at whether your current business expenses and income are helping your business. Consider eliminating expenses that aren’t useful to your business to reduce financial waste.
If you have a business subscription you don’t use, cancel it. Look at your necessary expenses to see if you can find better deals.
Similarly, look at your earnings and client base. Are you earning enough off each sale when you consider the expenses?
- Follow through on payments and expenses
Another way to make better financial decisions is through tracking your cash flow closely. If you completed a project for a client, make sure you get the payment on time. This will ensure that you receive your earnings.
Similarly, track your monthly expenses to make any payments on time. If you keep on top of payments, you can avoid late fees.
Keeping track of your financial decisions
Knowing how to make better financial decisions for your business also means organising those decisions to see how they affect your business. If you can track your financial decisions, it’ll help your business run smoothly.
You can use tools like Google Workspace or Microsoft 365 to keep your business organised. These business management tools allow you to keep your contacts, calendar, and documents in one place. This will help you closely follow your business operations and track your decision making.
You can also open a business current account to separate your business finances from your personal ones. This could help you track your finances and help you make better financial decisions to grow your business.
Keep on top of your finances with a simple app
Better financial decisions for your business means you’ll need to organise your finances. Financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier.
Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are.
You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!
Find out more here.