One of the most important factors to succeeding online is managing your cash flow. It’s a balancing act to be sure, particularly in the early stages of your business. You want to receive money in a timely manner from your customers and pay out money as infrequently as possible. However, there are also items you want and need to buy and it’s easy to overspend, particularly when you’re shopping online.
Here are three tips to manage your expenses effectively.
#1 Develop a system. It doesn’t matter what your system is, as long as you’re consistent and you stick to it. Some people prefer to track their money using an online tool like mint.com, excel or QuickBooks/quicken. Other people prefer the old-fashioned checkbook register or an excel spreadsheet.
It doesn’t matter what system you use, find the one that works best for you. What matters is that you stick to it. Track each and every deposit and withdrawal, each income and expense, and consult your account before you make any purchases. A little planning and a commitment to a system work wonders to maintain a positive cash flow and manage your expenses effectively.
#2 Get a business bank account, and use it. Keep your money in one location rather than having a credit card with one account, a debit card with another and a checking or savings account with another. It’s easier to track finances when they’re all coming and going from the same place. And it’s much better, come tax time, to have a designated business account.
It’s vitally important you don’t mingle your personal finances with your business finances, for tax and legal reasons. Protect yourself by keeping all business related expenses and income coming and going from one account. It makes it easier to keep track of what’s going on with your finances and it makes it easier to stay on track.
#3 Create a budget. Budget, the big B word of business. It’s a word that many people hiss in contempt. Budgets limit and restrict, right? Wrong. Budgets give you knowledge and freedom. Think of your budget more as a financial plan. Know what you have, what you need and where you’re going. Allocate monies for certain aspects of your business plan, for example, your marketing strategy, and keep some in reserve for those extra expenses, (like that eBook you found online written by your favorite industry expert).
So step one is to get a business checking account, create a financial plan/budget, and create and stick to a system. Follow these three tips and you’ll be on top of your finances and rolling in your financial freedom in no time. You don’t have to be an accountant to manage your finances, it just takes a little diligence and a smart system.
1 comment:
The key to effectively keep track of your business expenses is to regularly update your records. Yes, this is a very tedious task, but this must be done. In this regard, accounting software can be a very useful tool. Management-wise, it would be so much easier for a business executive to make important decisions if he/she knows how the company is doing in terms of finances.
Jamie Shellman
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