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How To Better Manage Your Small Business Finances

Is this the year to take your business to the next level? Success starts and ends with your finances, so to get yourself in the best possible position it’s important that you learn how to manage your small business finances. Here are some top tips to put you ahead of the competition.

1. Pay yourself a wage

It’s something that seems so obvious at the outset, but when you are in the middle of running a business many owners tend to put all their money into managing the day-to-day operations. Whether it’s keeping cash flow steady, investing in new product lines, or simply paying staff wages, it often makes sense to pour every last dollar into the business.

It’s an understandable but dangerous precedent to set. As a business owner, you want to build a company that will support you for the rest of your life. You should be compensated for the time and effort you’ve put into your work – so start treating yourself like a salaried employee.

2. Make tax a monthly operating expense

Tackling your quarterly PAYG and GST bills is a fear that many small business owners deal with throughout the year. If you aren’t on top of your incomings and outgoings, it’s easy to get to the end of the quarter and realise you don’t have enough to pay the tax bill.

Instead, spread out your tax into monthly payments to make things easier. You can do this by either speaking to the ATO, or instead you can set aside a percentage of your monthly business income (e.g. 40%) into a separate bank account that you reserve for BAS payments only. If, at the end of the quarter, there is still some money left over, you can either reinvest it into the business or carry it into the next tax period to reduce your outlay.

3. Keep cash flow healthy with early payments

Cash flow tends to have its peaks and troughs for every small business, with seasonality playing a major part – especially for industries like retail and hospitality. There are, however, a few helpful tricks for staying on top of your finances.

If you find that you are paying all your suppliers on time but your clients fail to meet your payments terms, it can quickly disrupt your cash flow. Tackle this by speaking to your clients and offering them a minor discount (e.g. 5% off) if they pay their bills early. This can keep them happy while ensuring you have a steady flow of income throughout the year.

4. Stay on top of your bookkeeping

It’s another obvious practice, but it’s one that many small business owners either put into the ‘too-hard basket’ or simply ignore until it’s too late. Managing your books will help illuminate how your business is running – for better or worse. And with that financial information at hand, you can make the most appropriate decisions for your business.

So take the time every week, fortnight or month – whatever works best for your schedule – to sit down and review your accounts. If you find you’re not getting around to it, it’s worth paying a bookkeeper for their services - it’s vital that you understand how cash is moving in and out of your business.

5. Look for growth opportunities

Even the best businesses can stagnate if they fail to evolve. Your small business should continually grow, innovate and expand to attract the best employees and get greater market traction. By speaking to financial experts and constantly looking for new opportunities to grow, you can strike at the right time and turn your business into a market-leading brand.

“Sometimes a growth opportunity is staring you right in the face but – for one reason or another – you simply can’t see it,” says David Crook, Managing Director at Nero Financial. “That’s where having a financial partner can help. At Nero, we support your business throughout its entire lifecycle. We can spot opportunities that will boost your market footprint and open you up to new audiences.”

Ready to stand head and shoulders above your competitors while always staying on top of your business finances? Contact Nero Financial today or call 1300 025 949 to find out how we can help get you there