Business is good and revenue is growing, but growth brings new challenges. No need to get overwhelmed—you can effectively manage your business finances with these tips.
As your business grows, your business finances become more complex. But with some preparation, an investment in the right tools and access to financial expertise, you can conquer these challenges.
Here are four ways to make sure you’re ready for every stage of growth:
1. Prepare your Business Finances for Every Stage of Growth
There are three key stages of business growth, and each has their own set of financial challenges. Where you need to focus depends on the stage of growth you’re at. So recognizing where you are at is the first step.
Getting Your Business off the Ground
The earliest days of your business are all about planning and budgeting. What can you reasonably expect to bring in per month and how much do you expect to spend? And once you do start invoicing clients, how do you effectively manage the incoming cash?
Challenge: Cash flow. When you start out, a huge challenge is often cash flow. As you generate business and develop your client list, you may be spending more than you’re making. Solution: Planning and measuring. Don’t skimp on tracking and reporting on your finances. Invest in software that automates the most replicable tasks, and make sure you always know where you stand. Weigh every business decision against the facts you’ve tracked. Challenge: Invoicing and tracking expenses. You’re managing everything yourself, including the company finances. Tracking invoices and expenses by hand gets old quick and easily erodes billable hours. Solution: Centralized accounting software. Having an easy-to-use, accounting and invoicing solution makes staying on top of paperwork day-to-day and in preparation for tax time a cinch. Scaling Your Business and Your Business Finances
For a scaling business, managing your business finances is all about establishing a strong financial infrastructure and investing in good financial habits.
Challenge: Managing a growing client base. As you grow, managing multiple clients and projects types can become nearly impossible. And missing the mark on client service can have a hefty price tag. Solution: Automation. In addition to simply developing a good billing strategy (e.g., billing on specific dates), an automated solution can keep track of projects and automatically generate invoices. Plus, automatic reminders and credit card payments makes getting paid easier. Bonus: It also offers an easy and accessible solution for your clients. Challenge: More complex accounting. With a growing business comes more money coming in and going out, which leaves more room for mistakes or omissions that cost you time and money to fix. Especially come tax time. Solution: Bookkeeping. As your financial needs escalate, you likely won’t have the in-house expertise to manage them. A bookkeeper or bookkeeping service can help. In addition, make sure your accounting solution offers double-entry accounting so that all incoming and outgoing costs are effectively tracked. Growth and Established Business Finances
With income and cash flow relatively stable, spending large amounts of money and increasing team size become realities. Your accounts have also likely gotten bigger and more complex. At this point, it’s all about finding the balance that lets you maintain profitability and secure greater growth.
Challenge: Lack of resources. Once you’veContinue reading