The COVID outbreak has left many business owners, especially small businesses, in uncertain times. As the world, tries to reel back to the new normal, they are several changes to employ that will help preserve your business.
Being adept at smart financial skills is a great way to ensure your business remains successful. After all, it all comes down to the financial strength of your business. Therefore, it is important to plan your business finances during COVID times. Outlined below are some essential tips on how to plan and preserve your business finances.
Stick To Deadlines
Adhering to your business action plans directly affects your business. For example, if your business has a reputation of not delivering on time even if your work quality is high, you are most likely to lose some clients, whose key priority is time management. Thus, just as you are conscious of your finances, you should also be cautious and consistent with your business dealings because this is how your business is financed.
In addition to the work delivery, you should also adhere to financial deadlines. The majority of your business dealings that bear a financial aspect such as business-related bills are always time-stamped. Furthermore, time-stamped financial dealings such as business bills also come with rules and regulations and if broken also bear consequences (mostly financial).
For example, if you delay paying your business taxes, you will be penalized. This means that your business would have lost a chunk of money to pay the penalties, which would have been used for profit-generating purposes. Recognizing that you may sometimes be overwhelmed with different business operations, set up a system to ensure you keep up with your deadlines.
- Setting up payment reminders in your calendars
- Paying within the payment window before reaching the deadline
- Setting up automatic payment releases on the due date
Always Monitor Your Books
It is especially important to be extra vigilant during these uncertain times. Even if you can afford to hire an accountant, you should also be very active in knowing about your business finances. Doing so doesn’t only ensure the safety of your finances, it also helps to track and monitor the business expenses and earnings. At the end of the day, you can capture discrepancies as well as make informed decisions about your business operations and investments
Let Business Finances Be Business Finances
The easiest way to kill your business is by mixing business finances with personal finances. This is especially true if you have a small business. Many small business owners are guilty of merging their personal finances to business as a way to fund their business. However, over time this will complicate your finances.
Instead, try to have separate bank accounts and accounting books because this will help to monitor your cash flow. Instead of chipping into the finances directly, you can for example, officially transfer money from your personal to a business account as an investment or loan. You can also set a weekly or monthly amount as your wage or salary from your business account. Doing so helps to easily track finances.
Make Realistic Budgets
Of all the times, you have run your business, this is the time to plan and stick to your plans – including your budget. During this time, your budget should be practical, realistic, and smart. Create the budget by shedding of unnecessary expenses and learn to negotiate for the things that the business needs.
Naturally, it is easier to track your expenses and earning when you have a budget and projected goals respectively. Your budget will also allow you to assess and know when you are spending too much or where to direct your finances.
You should also learn to track and time your expenses. For example, if you want to invest in equipment for your business, do your due diligence first. A good idea would be to project the returns, profits as well as the time it takes to get the returns. This is especially important if your form of financing the purchase is a business loan.
Being frugal during the COVID times will save your business. This doesn’t necessarily mean that you have to be frugal on all aspects – remember your business still has to run. Therefore, you need to learn how to prioritize your business needs. Renegotiate rates and payment plans with your suppliers, cut down on unnecessary expenses such as the end of week office drinks or fancy stationaries.
At the end of the day, being frugal also brings about positive results in the future. Because you cut down on unnecessary expenses, you will find yourself with a cash reserve. This comes in handy in case your business experiences any financial hurdles or if you come across an opportunity to help boost your business. Plus, you will not have to bring on extra liabilities such as loans or credit to your business in case of emergency financial needs.
Avoid Taking Risks
As much as you may be exposed to investment opportunities, it is wise to avoid taking risks. So before you tap into your business finances evaluate the opportunity and figure out if it’s worth it. This is certainly not the time to be spending obscene business finances on buying stock or trying out investment in opportunities that you are not familiar with.
Invest In Building Your Business
Not all investments are bad after all. Whilst making those sleazy businesses and capital investment moves is not a good idea, you can, however, focus on your business growth. You can set aside some finances from your budget to pursue these investments. This can be anything from purchasing new software to drive sales or getting expert consultants to help your business through these times.
Think About The Future
Your planning shouldn’t be centered on short term and day to day business operations. Your business finance plans should be extended to the future. Sit down and clearly pen out your ultimate goals and visions. Doing so will ensure you plan towards the proper route.