4 Money Management Tips Small Business Owners Need to Know

Written by Karen Bryan

Managing money effectively is one of the biggest challenges facing any new business owner. A business’s earliest days are its most vulnerable, and surviving them requires careful financial planning. Below are 4 money management tips for helping small business owners to manage their money more efficiently.

Separate Business and Personal Expenses

When you are just starting out with a new business venture, there is often a lot of overlap between your personal and professional finances. Separating both of these out should be a top priority for you as it will make managing your available money much easier. Most new business owners will need to wait a few years before they can withdraw a full salary from their new business. During this period, you will need to know how to set up your own system for distinguishing between personal and business funds.

The more you can separate the two, the better. For example, it is not a bad idea to open separate bank accounts, use separate credit cards, and ensure that any loans you take out for the business are business loans, not personal ones. When the time comes to hire an accountant to handle your money for you, they will thank you for having kept these two separate.

Negotiate on Every Deal That You Make

No matter how large or small and expenditure is, you should always see if there is room to negotiate on the price. You would be surprised how much money you might be able to save just by asking many of the other businesses that you deal with will be thinking on a long-term basis. If you have already established a relationship with them, the chances of a discount are much greater.

Be Careful with Your Accounting

Hiring a dedicated bookkeeper or accountant is the most surefire way of keeping all of your business accounts in order. However, this isn’t a viable option for many new businesses, meaning that they have to manage their own accounts. Having the right accounting software in place will make a real difference here.

Whenever you need to acquire software for your business, you should be shopping around for the best option at the best price for your business. PieSync has lots of very helpful comparison articles on its website, including an in-depth look at the accounting tools Quickbooks and Freshbooks, two of the most popular choices on the market today. Their blog is worth checking out whenever you are buying new business software.

Pay Off Debts as Soon as You Can

If you are already starting from a position of significant debt, you need to address this before you can really take control of your finances. The sooner you pay off your debts and get back into the green, the sooner you can think about saving money for a rainy day.

Don’t fall into the trap of using your business money to clear personal debts and vice versa. You should try and keep your debts separate as well as your finances, as this will prevent them from encroaching on one another.

Managing money is clearly a vital skill for any business owner to have. But good money management isn’t something that most business owners are born with – it’s something that requires practice. The four tips above can help any small business owner to regain their financial independence and manage money better.