Be money smart and learn how to manage your finances for your business

You have found a name for your business. You have registered it. Now it is time to work on your money management skills.

If you have bad money management practices when you start your business, you will struggle to see growth and know which parts of your business need to be reviewed and which parts are running successfully. Here are some points to consider when managing your small business’ finances.

Get a business bank account

It is important to separate your business finances from your personal finances. This will ensure that you will be able to complete your tax forms easily when the time comes.

Not separating these accounts will make it difficult to see where you spend your money on your business, and where you spend your money for personal acquisitions. When you set up your business account, you will need your business registration forms, personal identification and a small deposit.

It is also important to find out about the various methods that people can use to make payments into your bank account, and the fees related to these.

Do your books

By keeping an accurate account of your income and expenses, you will be able to see whether your company is running at a profit or a loss. You can do this in two ways. You can do it yourself by educating yourself with online tutorials and using an accounting package like Quickbooks. Or you can hire an accountant.

Alternatively, you could do both –  you keep track of the day-to-day input, but hire an accountant to produce quarterly business statements to ensure your business is running optimally.

Make payment easy

You need to be aware of the various methods that people can use to make payments. Payments can be made by cash, card, electronic transfer or mobile payment apps. It is important to know what your customers’ preferred methods of payment are and have at least two payment methods available for them.

The first option could be cash though cash is the most liquid of these methods, it is the hardest to keep track of. It can easily be lost or stolen. Furthermore, when you bank the money you may be charged a fee.

The second option is card payments. Many banks take a fee when people pay via card machines. The benefits are that the money goes directly into your bank and it is more secure.

The third option is an electronic transfer. Here it is important to be aware of the scams. When people pay by electronic transfer, it is important to let the customer know that you will only release the goods or service once the money reflects in your bank account. It could take a day or two clear.

The final payment method is a mobile payment app where people scan a QR code and the money is moved from the customer’s account to your account. This method may also incur a banking fee.

Invest your profit

When you start to make a profit, it is important to re-invest a portion into your business and to save a percentage for your lean months. By doing this you help to protect your business from becoming stagnant by investing into its growth, and you will be able to ensure you do not sink in the lean months.

By applying these strategies, you will grow your business into a more formidable enterprise which will have long-term success in its sights.

• Proudly brought to you by NSBC.