One of the most difficult aspects of starting and running your own small business is planning and managing your finances. However, it’s also very important, because without sufficient funds, your venture will inevitably collapse over time. But managing your money isn’t just about making as much as possible, it’s about handling what you have in the right way. Even if you haven’t got much to start off with, or suffer a slump after a few months of trading, proper money management can help you to survive and grow.
Make sure you’re insured
Insurance might seem like a waste of the little cash you have to spend each month, but it’s essential if you want to have any chance of surviving a future disaster. Public liability insurance is one of the most important types of insurance to take out if you’re going to be dealing with members of the public or their property. Accidents can happen and public liability insurance will cover the costs that come from court cases should someone become injured on your property or as a result of the work you’re carrying out.
There are lots of other types of insurance you can take out as well, such as coverage that protects your equipment or expensive machinery. Insurance typically doesn’t cost too much each month, making it relatively affordable even for start-ups.
Build up some savings
Whether you’re going to be working on your start-up full time or as a side hustle, you’ll need some savings to tide you over any rough patches. New businesses don’t always have a consistent cash flow, whether that’s due to clients paying late or having influxes of work before periods of quiet. You definitely can’t expect to receive a regular income, so you’ll need money to both support yourself and keep your business turning over when cash is in short supply.
Hire an accountant
Lots of businesses struggle with tax calculations, leaving them in a sticky situation at the end of the financial year. An accountant can help you to set aside money to pay both income tax and VAT, allowing you to have a more accurate view of your financial standing before your final bill hits. However, accountants aren’t just useful for administrative tasks, they can provide investment advice, support you through the process of taking out a loan, and may even be able to forecast revenue.
Invest money into your business
It can be tempting to hold onto as much money as possible, especially if you’re not sure how sales will go in the coming months and years. However, doing this will cause your business to stagnate. It’s important to sensibly invest money into your business to boost sales and improve the experience of your customers. Doing so will make you more financially secure in the long run, as your business is more likely to be successful. However, don’t invest all your money into your business, or spend it on things that won’t impact your growth.