65% of new businesses fail within their first ten years, and only 25% survive past their 15-year mark.
While businesses come in different shapes, sizes, and industries, these businesses all fail in one thing: proper financial management.
Business financial management refers to managing all financial aspects of your business and making them work for the betterment of your company. If you want to take care of your business’s basics and ensure it doesn’t fall through, you must learn to manage your business finances effectively.
Check out these three tips to get unmatched insight into what needs to be done to strengthen your financial standing.
Table of Contents
1. Budget, Budget, Budget
Budgets provide businesses with a roadmap to follow to ensure that income and expenditures are balanced. There are a few essential tips to keep in mind when creating a budget:
Know Your Income and Expenses
This seems like a no-brainer, but it is essential to have a clear understanding of your business’s financial situation. Track income and expenses over time to get a clear picture of where your money is coming from and where it is going.
Prioritize Needs
Not every expense is equal. Prioritize costs essential to your business’s operation without cutting corners.
Create a Buffer
Unexpected expenses always seem to pop up. To account for this, create a buffer in your budget for unplanned costs. This will help to ensure that your business can weather any financial surprises.
Review and Adjust Regularly
As your business grows and changes, so too should your budget. Review your budget regularly and adjust when necessary.
These budget tips will help you make informed decisions and put your money where it will be most effective.
2. Pay Taxes on Time
Paying your business taxes on time is essential to effective financial management. You’ll need to pay these taxes quarterly. You can pay taxes electronically on the Internal Revenue Service (IRS) website.
Taxes are a necessary part of business, and failure to pay them can lead to significant penalties and interest charges. The government imposes penalties for late payment, which can quickly add up and negatively impact your bottom line.
If you are audited, the IRS will put you under surveillance. Make sure never to miss tax day!
3. Hire a Professional
Look into hiring fractional CFO services. A fractional chief finance officer is someone who can help in managing finances and in keeping your business on track. They can help you develop a budget, track spending, and keep your books in order.
A professional can also provide invaluable insights into a business’s financial health and help make recommendations for improvements.
Excellent Business Financial Management Brings Great Success
Be vigilant with your budget, never miss a tax day, and seek professional help.
With aspirations of success comes the responsibility for excellent business financial management. Your company’s financial health matters. It takes determination and hard work to keep your business going and maintain sound finances.
Financial management is integral to running a business and reaching your goals as an entrepreneur.
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