The 5 Rules of Money Management for Small Businesses
Small businesses are corporations, partnerships, or sole proprietorships which have fewer employees and/or less annual revenue than a regular-sized business or corporation.
Individuals must know how to manage their money to become rich so you also need to know how to manage your business money to be successful.
Just like an individual, your business also needs to pay for the cost to survive. How to spend money effectively without getting caught in debt or going into debt?
Individuals must know how to manage their money to become rich so you also need to know how to manage your business money to be successful. With businesses, you will have to work with employees, suppliers, tax authorities. How to work with them, you always take advantage of the money you spend.
Here are 5 rules to help you manage money for your small business:
1. Minimise The Cost Of Life
If you are managing your own small business for the first time, the above principle is extremely important in the first few years. Calculate how much money you need to cover your monthly living and withdraw the right amount of income from your business. With the remaining profit, invest back into the company. Let that money serve growth.
It will be exciting to make money from a business, but many new business owners use it on expensive vacations or homes. Resist those impulses. Wait until the business has gone through a few years, then you can start taking those profits to enjoy yourself.
2. Do Not Hire Employee Early
In a fledgling business, the biggest expense, by far, is employee salaries. As the business gets busier and you seem to be overloaded, it’s time to hire a new employee right away. However, make sure it is essential.
Never hire staff until you need them. Always ask your current staff to work hard to make sure they work to the best of their ability.
3. Strategic Use “Jit”
JIT is an abbreviation of “Just In Time”. This is a strategy to reduce the cost of loans and inventory in all business forms.
For example, if you estimate you need to cover your expenses for next year, there’s no need to borrow the entire amount at once. Because if you do that, you’ll have to pay interest on the entire amount when you don’t use it up until the end of the year.
Instead, you will borrow that estimated amount in the first 2 months of the following year. Then borrowed it again for the next 3 months. Following this rule, you will reduce the total amount of interest payable to the bank. So that money will increase and you save a large amount of money after a long time.
4. Agreement With Supplier
When dealing with external contractors or suppliers, such as delivery services, food delivery, electricity, security services, do not hesitate to negotiate contract terms. Choosing a provider that allows you to pay after 30 days of receipt of service bills instead of paying immediately.
That grace period allows you to better manage your money and organise your bills in order of priority. Many peers always allow this but need to be willing to ask when they want to pay immediately.
Year: Do Not Pay Money To Wage Payments
State tax law requires business owners to deduct an amount in addition to employee salaries such as Social Insurance, Health Insurance, Union Funds and Unemployment Insurance for each payment period. Businesses will have a certain extension period before they have to submit this fund report. As a business owner, it’s important to keep those funds separate from other funds. Don’t use this money to invest or cover daily expenses.
Instead, put the money in a separate account that you cannot touch. This will help you avoid spending money that you don’t have to. It’s a good habit to keep your business free from violations at the end of every month. State fines will not tolerate such cases. Nowadays there are a number of maintenance planning training and maintenance planning courses were available online from that you can get more ideas for maintaining your business easily.