Financial management is one of the keys to the success of a business. If you don’t know how to manage business finances, be prepared to bear losses. Benjamin Franklin once said that one must be careful in managing funds.
According to Benjamin Franklin, the main source of the ship’s sinking was small cracks. Therefore, Benjamin recommends detailing the expenses. If you are able to manage these finances, the strength of your business will increase. As revealed by Mark. W. Boyer—that a cash flow controller has strong power over the company’s finances.
Then how to manage business finances?
Actually, to be able to manage business finances you can start learning business finance by yourself. But of course this requires references to the right mentors. So, how to manage business finances properly? Check out the following tips.
1. Separate Personal and Company-Owned Assets
One of the small things that often makes business people fail is considering business money as personal property. This perception is not wrong as long as the business belongs to an individual. But, without realizing it, the habit of mixing personal and business finances makes cash flow messy.
If it’s messy, you must be confused about determining expenses. The cost that should be for production, may be carried away for personal interests. As a result, the company also lacked capital.
So, what is the right solution to overcome how to manage business finances? The only way; Create two accounts in your name. That way, personal and business finances are not mixed. It’s also easier for you to document your company’s expenses.
2. Make Records of Expenses and Income in the Cash Flow Book
Have you taken note of the items purchased by the company? If not, immediately make a report in a special book. Make sure that all of these notes are adjusted to the purchase note or other proof of expenditure.
After recording your expenses, you should also document your income. The details of the two funds will later be used to make a financial balance. From the balance sheet, you can know how good the company’s finances are.
If the cash flow is smooth, don’t forget to control it regularly. Make sure all bills have been paid. Starting from electricity bills, water, employee salaries, to debt matters. Thus, it is easier for you to project the desired profit.
3. Long and Short Term
You can also manage business finances by separating long-term and short-term expenses. Starting from making a general plan for the business, including programs that will be carried out for a period. Then, make a breakdown of the needs of each program.
If you have made details in each program, divide it into two categories of implementation time. You can use the terms daily, weekly, and monthly expenses for the short term. Meanwhile, long-term expenditure covers the next 1-3 years.
4. Make an Income Plan from the Products You Produce
Dave Ramsey said that one should start work with a plan. Then, he is obliged to work on the plan. This means that if the planning is not fully implemented, the results you get will definitely not be optimal. In fact, it can cause financial losses.
Therefore, start by creating an income plan. Think of a product that can bring in money for the company. Determine how much production, market segments, and sales targets. Don’t forget, prepare a marketing strategy carefully so that you achieve your target as expected.
5. Hold Financial Evaluation and Cost Planning When Closing the Yearbook
The last way to manage business finances is Financial evaluation. This is the ultimate goal of documentation of cash flows in a period. Eko P. Pratomo, founder of Financial Wisdom, revealed that evaluation must be done for two reasons.
First, financial evaluations show the company’s achievements over a period. From the evaluation, you will know whether the path taken by the company is correct or still needs to be improved. In addition, the financial evaluation also shows the company’s overall financial condition.
You can introspect, whether the results you get are on target or far from expectations. The second reason is that the evaluation reveals the company’s spending patterns over a period. If there are many shortcomings, you can use it as an improvement in work steps in the coming period.
Those are five ways to manage business finances so that you can achieve success in business faster. In addition to financial management, hard work is also needed to achieve business targets. Said Colin Powell; Dreams cannot be achieved using magic power, but rather with hard work, sweat, and determination. So, are you ready to fight harder than now?