Business owners need to take on all kinds of tasks, especially when they are just starting out. Finances might be at the bottom of the list – surely, they just take care of themselves, and as long as what comes in is more than what goes out, everything is fine, isn’t it?
In an ideal world that would be true, but if a business owner doesn’t pay attention to what is actually going in and out of their business, there could be problems. This is why it is important to be financially savvy when it comes to your business, and here are some of the best ways you can do it.
Record Keeping
It’s massively important for business owners to keep records, and which records you keep and for how long will depend on the legislation and regulations in your state. However, no matter what the regulations say, keeping financial information is important if a business owner wants to know more about where they have come from and where they are going, so it’s wise to keep hold of these records for as long as possible.
When you have all of your records (ideally inputted into a spreadsheet for ease and efficiency) you will be able to see just what you were charging for an item at a certain time, and how much you were paying for it. This will help to change your pricing if you need to (and from time to time prices will need to go up, or you might want to put on a sale, but you don’t want to lose money), plus it will show you instantly whether you are making a profit or not. It is no good just assuming that things are as they always have been; checking your suppliers’ prices against your own is a savvy move, and your records will help you to do it.
Check Your Details
Mistakes can easily happen, no matter whether you are in business or are working individually. Checking your details, both personally and for the business to ensure that everything is correct is vital, and your credit score is one of the details you should definitely check.
Errors on a credit record can mean that you have a harder time borrowing money, or that the interest rates are higher through no fault of your own. Check your record and if there is a problem you should know how to dispute a TransUnion credit report or those from other credit companies. Fixing these errors that could be unchecked for years is a good move and can mean that you are more easily able to apply for credit when you – or your business – needs it.
Switch Suppliers
Although you would ideally like your customers to stay completely loyal to you, that doesn’t mean that you need to be completely loyal to your suppliers. If you are spending too much money with one supplier, search around for another and see if you could save. This will stop you from having to put your prices up and will keep your customers happy.
Alternatively, you could speak to your current supplier and see if they will drop their prices. You will have more chance of this meeting having a positive outcome if you pay your bills on time, so ensuring that everything is paid when it should be is another savvy financial move; you never know when you might need assistance, and if you are consistently late in paying, the supplier is going to be less likely to want to help you out.
It isn’t just the suppliers of your goods and services that you should look into; you should also check out what you are paying for your electricity and water, or your telecommunications including landlines, internet, and cell phones. Sticking with the same suppliers just because it seems easier than switching could be costing your business a lot of money. Switch when you find a cheaper deal, and you will be able to make more profit in the long term.
Spend Where Necessary
You might think that the best way to save money and be financially savvy in business is not to spend anything if it can be helped. It’s true that this will save you money, but will it help your business in the long term? The answer is most likely no.
There is an old saying about having to spend money to make money, and in some cases in business that is true. The key thing is to work out where spending money is going to bring you a good return. Your marketing, for example, should have a healthy budget because without marketing you won’t make any sales. As a business owner, you need to look at your spending as an investment, and work out the returns so that you know what to spend your money on.