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The Most Effective Way to Manage Business Finances

The Most Effective Way to Manage Business Finances. Building a business and growing it big requires a tough effort. The heavy and at the same time important part that can bring our business success lies in how to manage business finances. It takes discipline and sufficient understanding to manage money in any business.

Whether it's how to manage workshop business finances, how to manage culinary business finances and all other types of business, the key to success lies in money management. Because basically, a business gets results from the sales that occur. This little by little income if managed properly will produce something good too.

Here are some ways and tips that we can apply in managing a business. Please note the steps and stages below so that we can get progress in developing the business. Then, what are the ways to manage business finances in question? Come on, see the Qoala team review below.

The Most Effective Way to Manage Business Finances
The Most Effective Way to Manage Business Finances

1. Record All Expenses

The first tip on how to manage business finances is to record all expenses as detailed and as good as possible. If we can't do this well, whatever type of business we do it will be difficult to develop. Whether it's in managing the finances of the meat business or any business.

By recording all expenses, we can track well where every money we use. Take, for example, how to manage the finances of a shop business, every expense incurred to buy various selling materials must be recorded in detail, that way we can measure how much profit we get from each item sold.

One of the important things that will make it easier for us to record all expenses is to keep all evidence of expenses while running a business, it would be better if proof of income was recorded. Because every ordinary expense is measured by every incoming income. The difference in the number that occurs, will be seen as a bright spot.

The main goal by recording all expenses is to cover any discrepancies in the numbers that occur. The difference in numbers is a natural thing, the money that has been spent is usually not in accordance with the existing evidence of expenditure. This can be done by looking at proof of income, that way all financial movements can be tracked properly if you have a record for all costs incurred.

2. Making Financial Projections

The next tip or way to manage business finances is to make financial projections. The financial projection in question is to imagine in the future what expenses will need to be made for business purposes.

We can first determine the time period, for example in the next six months. What are the expenses that will occur during the six months. For example in how to manage the finances of small trading businesses such as stalls. Usually, within six months, a warung business will incur the following costs:
  • Every week / month buying merchandise that runs out
  • The second month buys additional equipment to support the shop
  • The third month of multiplying shop merchandise
  • The fourth month of expanding the shop building
  • The fifth month opening a shop branch
  • Sixth month doing promotions to develop buyers
The list above is only an example if we run a shop business. But the list above is an example to be achieved in the future. By having detailed financial projections as above, we can prepare the needed finances. We can use the profit earned by posting it first.

Making financial posts is important. We can focus on the first post for monthly and weekly needs, the next post for other interests according to predetermined needs. This step is an important tip for managing business finances, especially for business development so that it is more organized with a clear vision and mission.

3. Keep Personal and Business Finances Separate

It is important to remember and note for every novice business person, one of the factors that makes business finances a mess is the mix of personal finances and business finances. If in normal and stable business conditions, the union of personal finance and business finance may not be felt immediately.

However, if in a crisis and emergency, the mix of personal finances and business finances will make the business go bankrupt and fall apart. Therefore, the wisest way to manage business finances is to separate in advance which is personal money and which is money for business.

For example, in how to manage small business finances, personal finances will be difficult to track because the movement of money into small businesses is very slow. One of the main goals of separating personal and business finances is to be able to track the movement of finances.

In the basic principles of accounting and money management, separating personal and business money is basic. To be able to do how to manage finances in a business, especially for every entrepreneur who wants to develop a business, finances should not be mixed and messy.

Create two financial accounts, for personal use your name and identity, and for business finance use your business name. Save money for business development in a business account, and money for daily needs in a personal account. So that everything can be tracked properly and run well.

4. Pay All Bills On Time

It must be mandatory to pay all bills on time, because that way, we can know the profit earned. In managing business finances, bills must be paid in advance and on time. Because, if the bill has not been paid, then the profit obtained is not pure we have.

Profits can be calculated on a net basis when all bills and arrears have been paid off. In the way of small business financial management, there are terms gross profit and net profit. Gross profit is income earned that has not been deducted by expenses, including bills. The net profit is the pure profit that we get.

5. Calculate Income and Profit in Detail

Tips on how to manage business finances next is to calculate income and profits in detail. This section is not much different from the point in number one, which is to record all expenses. The difference is in the expenditure and income.

In these tips on how to manage business finances, calculate every income that has been obtained. Cut by every obligation to be paid, then then we will get a pure count of our profit. That way, we can find out how much our income and profits are in detail.

That way we can continue how to manage business money, in order to achieve success in business. Because, a good entrepreneur is an entrepreneur who can wisely record every financial flow that occurs.

6. Minimize Travel Costs

Tips on how to manage business finances well, next is to minimize expenses. One of the expenses that we can minimize is the cost of travel. Traveling, especially for business purposes is important. However, spending money on a business is also important.

Especially in running a culinary business, the importance of observing ingredients and experimenting with food tastes requires us to travel. However, we can outsmart the cost of the trip. That way, we can do how to manage culinary business finances well.

Minimizing travel costs and optimizing income for business development are important things in how to manage finances in business, so that our business can progress and develop well.

7. Pay Attention to Contract Agreements with Third Parties

In managing business finances, especially during the business development period, we often enter into business agreements with third parties. Partners in managing a business are important things that can make our business progress and develop.

Especially in today's online-based digital world, business development collaborates with each other and relies on various parties to work together. Therefore, by understanding and paying attention to business contracts, we can be better organized in how to manage online business finances.

This can also overcome the bad possibility that occurs, namely the occurrence of fraud from an adverse third party. With the employment contract, we have strong evidence to sue and compensate for all the losses we have suffered.

8. Monitor Financial Cash Flow

One way to manage business finances that we must do in a very disciplined and responsible manner is related to the supervision of financial cash flows. If you think about it, just monitoring financial cash flow is a very easy thing. We just need to separate where the money is for business interests and where the money is for personal interests.

However, in practice, monitoring financial cash flow is difficult. The difficulties encountered are usually related to self-discipline and responsibility in supervision. The smooth flow of finances will affect the smooth running of a business.

Especially for those who run businesses with very fast money movements, such as in running a meat business. In the way of managing the finances of the meat business, the financial flows that occur every day are very fast. Money in and money out must be monitored as well as possible. If possible, no matter how small the income and expenses, we must monitor it in as much detail as possible.

Once we are able and master this, then we will be very easy to do how to manage the money from the sale. Financial distribution will be smooth, which money can be distributed for development, which money can be saved as an emergency fund, which money can be used for operational costs, we can monitor its movement properly.

9. Use Profits to Grow Your Business

Profit is the profit we get from the business we run. Getting very high profits from business results is of course something that is coveted by every entrepreneur, but unfortunately many entrepreneurs are immediately tempted to use profits for personal gain.

In fact, in a good way of managing business finances, profits should not be used directly for personal interests. Wise entrepreneurs will save the profits first and then use them as capital to develop the business they run.

The profit earned, be it big or small, is diverted to develop the business. There are several stages that must be passed in order to be able to use profits for personal purposes. One indication is when we feel a business is running steadily.

For example, in how to manage the finances of a shop business, any profits and profits generated are better saved first and then used for various stall necessities that have run out. Do not think about using profits for personal gain.

In a good way of managing business finances, one of the effective ways to develop a business is by turning profits. Do not use personal money or business capital money for business development. In the end, when the business finances are stable, we will be able to manage every profit, including for each personal interest.

10. Look at Ownership of Assets, Capital, and Accounts Payable

In running a business, we may be busy doing business development. Increase business capacity, widen customer reach and also create various programs for our business interests. And oftentimes, every entrepreneur forgets one important thing, which is to take note of everything he owns.

Observing the ownership of assets, ownership of capital and also debts owned is a basic thing. Before we master how to manage business finances, we must be very aware of asset ownership. Because, assets are our main capital to run a business. Do not let us sacrifice the assets we already have in the name of business development.

Many entrepreneurs pawn the assets they already have, such as buildings or equipment, to get additional money that will be used for business purposes. Observing assets, capital and accounts payable is basic, so that we can carry out how to manage personal and business finances.

Before making developments in how to manage the finances of a startup business, we continue to update the list related to asset ownership, capital and accounts payable. This way, we can find out what we have and what we haven't finished.

11. Consultation with an Expert Mentor

Don't hesitate to consult with a mentor who is an expert in managing business finances. Consultation from experts will be very significant in improving business performance. Especially, for those of us who intend to grow our business even bigger.

For those who have run how to manage the finances of a small trading business, and want to move into managing a larger trading business, consulting with a mentor is a tip for managing business finances to be more organized. The presence of a mentor can also be better for educating our entrepreneurs mentally.

Mentoring with this expert can also measure how well our mental development as entrepreneurs is. It is important to know how far our mental development as entrepreneurs is, this can help us go beyond our limits to become even better.

12. Use Software to Manage Finances and Sales

The last tip on how to manage business finances is to use special software to manage the finances of a business. In the midst of the development of digital technology today, there are many software or applications that can be used to manage finances.

Especially for those of us who are beginners, the use of financial software and applications is very important. So how to manage small business finances can be arranged and slowly the business will develop. The use of software to manage finances is also very important to minimize the occurrence of recording errors that lead to unwanted things.

Both paid software or applications that we can freely download are available for use. It's just that, use the one that really fits and is comfortable for us. It is better if we are accompanied by a mentor or financial expert when using the software or application.

Hopefully the explanation regarding the tips and how to manage store finances above can help us to be more organized in managing the finances of a business. Whatever we face while running a business, financial matters are something we must think about more.

Like a vehicle, finance is a moving wheel. How fast our business grows, depends on how well we manage finances. There are many ways to master how to manage business finances well. One thing that is important, financial discipline is the key to the success of a business. In addition to having to be disciplined, set aside the results of your business to buy the best insurance with the aim of protection.