Financial management is one of the most important factors in any business, but for micro-small businesses it can be verydifficult to control and manage. Below are 4 steps for how you can get control of your finances.
1. Separate your personal finances from your business finances
Separating your personal finance from your business finances is the most important step when running a business. When your personal finances and business finances are mixed together, not only do you not know if your business is making money, but you don’t even know how much money your business has.
2. Record everything!
After separating your personal and business finances then the next step is record all your transactions, if you don’t know how to do book keeping then the easiest way to do this is to record all the money that comes into your business (every sale) and all the money that goes out (every expense). Write them down and calculate money in – money out every day.
3. Pay yourself a wage
You may be wondering that once you start separating your personal finances from your business finances, how do you earn money? You pay yourself a wage! Choose a salary that you think the business can afford and that is reasonable for the job you do. Then pay yourself a regular wage, some months you may not have enough money in your business which is ok, and some months you may have lots left over. Try not to vary your wage based on how much money you have, as much as possible be consistent.
The last step is to manage your cashflow and do regular cashflow forecasts, to read more about this watch our video here