Business owners struggle with the same things everyone else does. One of the biggest challenges is financial. Here’s how savvy business owners manage their money.

Financial data analyzing. Counting on calculator.

Understand Your Expenses
Most businesses know they have expenses, but they don’t do a lot to understand them. For example, they understand they need printer paper and ink, but they may not understand why or what they can (and can’t) live without. They’re doing things the way they’ve always been done, instead of rethinking certain ideas about the way business is conducted.

Smart business owners need to consider long and short-term risks and plan for the future. Managing employees and complying with regulations is no easy task. The secret, for many, is to outsource the headaches.

Use a bookkeeper to help you manage your cash flow, taxes, and other accounting requirements. If you rely on seasonal workers, or you work in an area or industry that’s inherently high-risk, it might make sense to talk to Tate Law Offices, a Dallas motorcycle accident lawyer, to help you better understand the risks you undertake as a business and how to reduce those risks.

Eventually, what will happen, is you’ll end up with a clearer picture of what you’re spending your money on — from insurance to office space and utilities.

Overestimate Expenses

Businesses get into trouble when they misjudge their expenses. In most cases, it makes sense to overestimate expenses. Every business is slightly different in how it manages its expenses. And, often, it means they can’t predict when something is going to go over budget. But, you can counteract that to some degree if you’re willing to overestimate on your needs.

Every project that has a one-time cost that’s not anticipated poses a threat to your monthly budget. It’s usually a unique extra item that’s necessary for the job, but wasn’t fully understood or anticipated when the project began. Plan on a 10% buffer for small projects and a 20% buffer for larger ones.

Pay Attention To The Sales Cycle

Many businesses go through busy and slow periods. This is the classic sales cycle. For example, an employment agency might be busy during the 4th quarter of the year, during the rush of the holiday season, and then slow down in Q1 and Q2.

There’s a lot you can learn about your own sales cycle that can help you even out or smooth out your income pattern and budget for expenses. Get ahead of yourself, financially, and you won’t have to worry about slow times.

Plan Large Purchases Very Carefully

Some large expenses occur when you’re not ready for them. That’s why it’s so important for businesses to have a cash reserve or savings. Equipment breaks, and needs to be repaired, or new equipment needs to be purchased. Planned expenses, like a store renovation, is less of a financial shock. But, either way, you need money for it. Budgeting for these expenses ahead of time, and planning for emergencies is crucial.

Revisit Your Budget

Your budget can’t ever be static. It’s changing all the time. And, it will continue to evolve with your company. You’ll want to keep adjusting it for your own growth patterns and profits. Revisit things monthly and annually.

James Bailey works as a business consultant, and has been in the job for several years now. Working mostly with startups, he enjoys a challenge and new ideas. See his articles on business blogs around the web.

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