Make Better Finance Decisions with These Tips

As a small business owner you do it all. At every step of your process, you are there to find solutions and ensure all operations are running smoothly. A role you are likely to find yourself in is Chief Financial Officer — and you’re not alone. Most small business owners handle their company’s finances whether they have any real financial expertise or not.

But inability to manage business finances is holding companies back. According to the National Small Business Association’s Year-End Economic Report 2014, almost one in five small businesses can’t meet increased sales demand due to an inability to garner financing.

It isn’t enough just to squeeze by with minimal financial knowledge while running your business. To truly succeed as your company’s financial manager, you must achieve financial literacy. How? Follow these five tips to improve your financial knowledge and make better business decisions.

1. Identify all your costs — For a sound financial plan, you need to know exactly how much you need to spend to run your business. Find the true costs of rent, employee salaries, taxes, utilities, and other expenses needed to function. Also consider hidden costs, such as any required licenses or permits, your own salary, and legal services. Identifying these figures gives you a better idea of your financial situation and helps you eliminate any expense that is unnecessary.
2. Determine your priorities — What are your ultimate financial goals? Obviously you want to make a profit, but besides that — do you want to sell to a big box retailer? Or take your business international? The priorities that guide your business should also be invested in so you can work towards those goals.
3. Take advantage of resources — You don’t need to earn an MBA to improve your financial knowledge; there are many resources out there to assist your learning. Webinars and seminars are a great place to start. Resources such as the American Management Association offer accounting and financial training courses to interested business owners for a small fee. Financial management software can also guide you through difficult tasks and give you a better idea of your financial situation.
4. Learn from mistakes — Whether those are your own mistakes or the mistakes of others, taking away a valuable lesson is the best way to avoid future mishaps. Common financial errors such as underpricing your products or services, paying payroll taxes late, or hiring people who don’t directly affect business results can lead to catastrophic results. Avoiding these known downfalls, among others, can save you from a financial crisis before it happens.
5. Seek knowledge from other organizations — Acquiring the assistance of a small business operations expert can give you direct insight into your ongoing financial health. These professionals can offer advice and aid you in your financial decision making — helping you at every step of the process.

You don’t need to be a financial professional to successfully manage your finances. Have insight in your own budget and goals, and seek the expertise of others, to improve your financial knowledge and take your business in the right direction.