Last Updated on February 14, 2019 by Jessica Adams
There are always going to be those areas of business finance that are easy to overlook. While we all have our strengths and the areas of business we actually like to work on, you’re always going find that one thing that you’re just not cut out for.
This usually happens because you’re just not as experienced in those areas and that’s only normal. We couldn’t all be at the top of our game in every subject in school, just as we can’t expect to be skilled at everything in our business. But this doesn’t mean that you should ignore the things that you’re not good at.
Rather, you need to recognize those things and aim to work on them or get help with them if you need. For many people, business finance can be really difficult to grasp. So, to help you, let’s consider the four rules of business finance.
Here Are The Four Rules
Of Business Finance
Invest
First of all, you’re going to want to make sure that you are investing in the business in question. Whether it be your own business or you’re seeking help with business finance because of the company you’re now with.
Initially, you want to invest in the business so that you can get things off of the ground, get started. But then you also want to reinvest in the business. If you’re making money and then taking it out of the business to pay yourself (until you turn a serious profit), you will struggle to grow.
Instead, you want to consistently put money back into the business so that it can grow. This is why people usually take out loans at the beginning of their business’s ‘life’. It’s important that your business has the money it needs but also, that you and all the other higher-ups are able to live comfortably.
Spend Less Than You Make
This is so much easier said than done, am I right? If you want to make sure that your business is going to last and become successful, you need to spend less than what you make. People do this every day, all day long! Is it ideal? No. Is it necessary for a little while? Yes.
New businesses still have bills to pay but have very little income to pay them with. However, if you can focus on keeping your costs down over time, then you’re going to find that breaking even and making a profit isn’t as painful a process as you thought.
Start Saving Like, Yesterday
Okay, are you ready to have your mind blown? You could actually try to save the money that you’re making, assuming the startup you’re involved with received a starting loan.
Of course, if you’re being paid directly from the profits, you shouldn’t be spending a dime of that money! You may find that you need money to fall back on should something go wrong.
Or maybe you want to save up for new equipment, marketing or future growth in the company. So it’s handy to have a business savings account to keep this money. That way, you can keep your checking account separate and not get the funds confused.
Keep Track of All the Money!
And finally, it’s in your best interest to keep detailed track of your financials too. Not only does this help make things easier on everyone, keeping track of your money is pretty much ‘Business Finance 101’.
If you keep a record of what goes in and what comes out, it’s much easier to have a top-line vision of where you are at all times. Not only that but you’ll need all that information you’re already be collecting come tax time too.
So you’re effectively saving yourself time. It also helps you to feel financially on track and will improve your connection to your finances – meaning, finances can’t really be seen as something, ‘only for the numbers guys’ anymore. So it’s a win-win!
Edited by Jessica Rose Adams
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