A lot of people are interested in managing their money. Managing money a businessman can significantly reduce his expenses and increase his profits.
Today, a lot of businessmen use technologies to manage money. There a lot of applications that can help with this task but we would not talk about them in this article. We will talk about the rules which you can follow using modern technologies. These rules will help you to increase your profits with the help of the management of money.
Separate your personal finances from your business
This is perhaps the first rule which is not always followed even by experienced entrepreneurs. It is important to share the cash flow when buying things necessary for business and personal use, cash for entertainment and dinner at a restaurant with friends.
Most often such a situation arises when an entrepreneur works alone. What difference does it make? You invest personal funds and take profit for personal needs. However, if you do not keep separate accounting, you can not correctly assess the work of capital in your business, analyze the costs, worse predict costs and moreover, increase the risk that you will not even notice how the financial complexity of the business will become personal.
Modern management applications can help you to divide your personal money from money for your business.
Keep your costs as low as possible
If you start a business from scratch or even if you have some start-up capital, in the first stage spend money only on what is necessary to start your project. If you’re making a relatively new product or service, don’t forget the principles of an economical startup: make the simplest version of a product or service that replicates your idea as much as necessary to assess demand and adjust your idea. If you’re starting a typical business with a predictable cost structure and payback period, don’t forget that the conditions are always different, what others have done may not work for you right away. So, create the easiest and cheapest infrastructure to evaluate your capabilities at first.
Learn how to get some services for free or barter. More often than not, seek help from your business and personal dating network, look for advantageous offers, trade with suppliers, look for cheap promotion channels. Perhaps, later on, this strategy will not be very justified, but in the first few steps, you will be able to attract the first customers and gain important experience with minimum cost. If this experience is unsuccessful, it would be a good idea to make it worth as little as possible.
Start a business is not the time for high salaries, unjustified expansion of the staff. Your ambitions will push you to do better than your competitors, but this can lead to you burying your first business at a high cost before customers learn about your benefits. Try to compete for the first time at low cost and unique service.
Modern management applications like CoinKeeper will help you to track your costs and make them smaller.
Maintain management records
Record all of your expenses and income by defining the structure of the items you want to keep both planning and accounting for. Get used to it from the beginning. At the top level, it is common to divide the costs of core activities, payroll, marketing, business activities, and taxes. Income – for core activities and related. Understanding of the financial structure of your business should be developed from the first days. This is what will allow you to manage your business based on specific numbers.
Goodbudget – management application which has a comfortable interface and which will help you to record your expenses.
Plan your expenses and revenues
One of the most important components not only of financial management but of business is the budget. Not having a financial plan and financial model of business is the same as doing business without a goal. Analyze the market, your opportunities at the start, make a profit and loss forecast and start doing business according to that forecast. Your very first forecast is likely to be wrong and will need to be revised very soon. At first, your forecasts will require regular adjustments, but over time, you will start to understand the market and learn how to manage the leverage of the business so that financial plans are implemented. A company that has learned how to plan well and execute its plans is stable in the market; it is much easier to get investments or loans for development.
Also, don’t forget about the large expenditures that can expect you in the future. This applies to taxes and deferred obligations. In addition to keeping a budget, note important financial events in the payment calendar. Monefy can help you with it.
Monitor your cash flow on a regular basis
Cash flow is the bloodstream of your business. At the first stage and in the process of growth, it is important to constantly monitor what is happening with your profits. As long as your business model is not fine-tuned and constantly changing, it is important to keep track of the key figures – total revenues, total costs, profit for the period (day, week, depending on the number of transactions per unit of time) and account balance. In the first period, it is important to learn how to manage your cash balances. If you see that your account is running out of money, encourage early payments from customers with discounts or reallocate resources to get payments from current customers faster. Also, try to work with clients on a prepayment basis, and make mutual settlements with suppliers when the work is done.
Each businessman wants his business to bring him a huge profit but this needs to know some rules. We have told about the main rules in business which can be used with the help of management applications. In any case, if you operate a B2B company, there is a way to put the control of your payments back in your hands using invoice financing which is very useful. Following our rules, your business will bring you great profit.