business finances

First Time Business Finances: Making Them Work For You

Finances in business are a fine balancing act—you need to spend money to make money, ensuring that you’re running a quality business and still making a profit. If you’re a new business owner, it’s a lot to get your head around, here are a few ways you can ensure you’re getting things right.

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Minimize overhead costs

When you first start out in business, there are lots of overhead costs that you need to pay. Depending on what you will be doing, it includes everything from renting premises to purchasing equipment, stock, hiring staff, getting insured and much more. The important thing here is to know where you should make savings and where you should spend a little extra, as you don’t want to affect quality.

For example, when it comes to your website, you’ll need to pay a proper web designer which won’t be cheap but is essential for a professional finish. But with equipment, you could save by buying second hand to begin with, or even hire equipment. You’d pay a fee for this but wouldn’t need to find a large upfront cost, plus if it breaks down (as long as it’s not your fault) the hire company will fix it for free.

Hired equipment could be anything from coffee shop coffee machines to fork lift trucks to professional printers depending on what your business does. Another way you can keep costs down initially is by outsourcing work rather than hiring your own staff. Hiring employees comes with a lot of costs and responsibilities, you have to pay for advertising the job listing, you need to spend time (which is money) going through CVs and interviewing candidates. You need to run background checks, and then train the successful candidates which all come with costs. Not to mention you need space and equipment for your employees to work from, and a HR department to manage them.

You can avoid these by outsourcing work to a third party company instead. They will have their own employees, equipment and everything else in place- you assign the task or even the entire departments work and they will do it for you. Again, while there are fees to pay, you avoid the huge upfront costs that come with recruiting your own staff. 

Automate what you can

Automating areas of your business saves you significant time and money. While you’ll need to pay upfront for the software, you’ll need to employ fewer human workers to keep things moving which is cost-effective. The staff you do have can be used to their best potential, instead of being stuck on tasks that a computer can do in minutes. Automating jobs makes everything quicker and more efficient, so be sure to research software and invest in any which is going to make life easier.

It could be accounting software to track the daily runnings of your business, to HR software to automatically plan rotas and so much more. Later down the line when your business is earning money, you could invest in custom-designed software that’s built specifically for your venture. 

Get an accountant

Speaking of accounts, accounting software is great but it’s worth hiring an accountant too. This is because when it comes to things like your tax return, it can’t all be automated. The tidy accounts kept through the software will make their life easier (therefore it will be cheaper for you) but you’ll need someone that knows what they’re doing to enter things manually and work out certain parts of your return. When it comes to things like claiming back expenses, these sorts of things will need to be entered manually and submitted so again, you can’t simply expect software to be able to do it all. 

Consider using savings 

Many businesses need to take out loans in the early days to get started. While this gives you upfront money that you can use to buy the things you need, it means you’re starting off in the red. If the business takes longer than expected to get going, interest rates and other costs can start mounting.

If you use your savings, you reduce the amount of debt that you start with. Maybe you have life savings, an inheritance or a company like Robinette Law has secured you a personal injury claim from a previous accident. Either way, use the money you have and supplement this with loans if needed as it will make the early days of your business easier to manage with less debt. 

How To Improve The Financial Health Of Your Business

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Entrepreneurs will always have finances on the brain! Money is what keeps your business ticking after all. Everyone once in a while, it’s a good idea to think about the state of your financial health. This doesn’t just mean how much profit you're making in the here and now. Your financial health refers to how well you are managing your finances overall.

Are there areas in which you are overspending? Could your cash flow stand to improve? Have you planned financially for the future? It’s as much about cutting costs as about investing in professional help to improve your finances. With all this in mind, let’s look at a few ideas. 

Cut your expenses 

Reviewing your expenses regularly is a great idea to improve your finances. A review will allow you to see if there are any areas where you can afford to make cutbacks. If you think that you’re suppliers aren’t giving you the best prices, perhaps it’s time to have a shop around. If you think that you’re overspending on marketing, put your on SEO hat and do it yourself! Little savings here and there can make a world of difference. 

Hire an accountant 

Hiring an accountant is a great investment to improve your financial health. An accountant will have the skills to manage your cash flow perfectly. They’ll be able to monitor your expenses against your budget and help you to maximize profits. In the event of an audit, it’s ideal to have an accountant to help you through the process.

With their services, you’ll ensure that you don’t miss any tax deadlines and incur penalties. Expert analysis of your finances can help you to plan effectively for the future. Most businesses will use accounting software these days, such as Quickbooks. An accountant will have in-depth knowledge of the latest software and will be able to provide you with training.

Hire an attorney 

The services of an attorney can be an excellent aid to financial health in many ways. When you draft contracts, you’ll want an attorney’s input to ensure that all is legally above board. Failing to get legal help when drafting contracts could lead to costly problems further down the line.

By investing in the services of an attorney, you’ll be able to protect yourself across a range of areas. Say you are hiring a new employee, your attorney can support you through the correct employment law legalities. Many businesses find themselves in debt at some stage. If this is the case, an attorney can assist in your financial situation. Tully Rinckey offers a range of excellent attorneys should you require such services. Here you’ll find attorneys with much experience and in-depth knowledge. 

Lastly, the power of budgeting should not be underestimated when it comes to financial health! The more detailed your budget is, the more chance you’ll have of improving your finances. Ensure that you keep your business account and person account separate. This way, your finances will not become confusing.

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