You’ve come up with the perfect business model. You’ve researched your customers, you know how to market your products and services. But there is still one thing missing: money management. Without a plan to carefully manage your money, you stand to lose it. Here are 6 money management tips for any new entrepreneur.
#1 Track everything. Whether you hire an accountant or do it yourself, it’s important to keep track of all your finances. Monitor expenses and income, and financing or growth capital obtained. If you don’t have a proper idea of where your money is going, you can’t begin to manage your money or your business.
#2 Set goals. You probably set some goals when you came up with your business concept. In the same way, setting money goals is important too. Think of where you want your business to be financially – one month from now, six months from now, in 10 years. Consider things like profits, savings, investments and net worth.
#3 Do credit checks. Will you be offering credit lines for your customers? While this can be a great service for your customers, it can definitely put your business at risk. If you are going to offer such services, do credit checks and make sure your invoices are paid on time. Consider offering a small discount for invoices that are paid immediately as an incentive.
#4 Set payment terms. Dealing with customers, it’s important to have a set policy on payment. Will you be paid up front for all your work? How many days will customers have to pay invoices? Determine what you want your payment terms to be, and include them in your contracts, and on your work orders and invoices.
#5 Create a debt collection plan. Though you do your best to avoid these situations, there may come a time when a customer is late on their payments or refuses to pay at all. Because of this possibility, it’s essential that you know what you plan to do to collect the debt. Start by understanding the laws in your state when it comes to how you should communicate with your delinquent customers. You may also consider hiring a collection agency to help you. If the customer still refuses to pay, bear in mind have to take them to small claims court.
#6 Micro-manage any employee spending. If you plan to hire employees, keep their company spending in check. This is especially important if they will be allowed spending accounts or have to travel for business. Make sure that pricey lunch meetings or first-class plane tickets don’t make it on to the company’s account. Make it a policy that anyone spending your funds should search for discounts or lesser priced alternatives. Watching your finances is important for any business, but it’s especially imperative for when your business is still new. As a new entrepreneur, you want to make sure you have more money coming in than going out. Use these 6 tips to help manage your money and put your business on the right financial track.