Four everyday finance tips for keeping your small business’s annual spend and finances in order throughout the year
The financial stability of your business is critical to your ability to adapt to changing market demands — both positive and negative — and invest in the resources that provide a positive customer experience.
Here are four financial tips that can benefit every small business owner this year.
Plan for Estimated Tax Payments
Setting money aside for the quarterly estimated taxes you’ll owe to the state, federal government, and (possibly) the municipality in which you do business ensures that you’re financially prepared to meet your quarterly tax obligations on time. In addition, it can help you manage expenses and cash flow accurately, less the cost of tax payments.
Open a business bank account dedicated solely to saving the money you need for quarterly taxes. Establish automatic monthly transfers to your “tax account” when you’re paid by clients so you’re not tempted to postpone setting the money aside later, only to find that you’re short on cash when tax deadlines approach. Though what you’ll owe in taxes is contingent upon many factors — including how many deductions you’ll take when you file your annual business tax return, the state and municipality in which you do business, and the type of staff you employ — a good rule of thumb is to set aside approximately 30 percent of your monthly revenue for taxes.
Revisit your Strategic Plan
A strategic plan that accurately reflects your short- and long-term business goals is key to making informed financial business decisions. At the start of the year, check your strategic plan to ensure it’s still reflective of your goals, and new insight you may have about your audience, the competitive landscape and emerging trends.
When you have a realistic vision of where you want your business to head for the short and long term, you can manage your businesses finances to meet those goals. If your strategy skews towards the short term, for example, you may opt to not invest in upgraded facilities or technologies, and instead devote your resources toward building a highly optimized business model that prioritizes high margins and sales volume. If your strategy is about building business for the longer term, it may be more appropriate to invest in deepening or broadening your capabilities, or expanding into new markets.
Lean business models maximize every dollar spent, and eliminate the costs that don’t contribute to growth or value. Review your monthly financials to identify costs that could be minimized with nontraditional solutions.
The customer experience in checkout, for example, can be enhanced by replacing a traditional affixed cash register with an “anywhere, anytime” checkout process that allows staff to accept a customer’s payment on a smartphone or tablet device, and eliminates the need to print hard copy receipts. Similarly, collaborative workspaces provide a place for small teams to work side by side as a coherent unit, but “share” the cost of pricey office resources and common areas — including parking lots, and conference and meeting rooms — with other entrepreneurs and startups.
Optimize your Professional Costs
Manage how much you spend on accountants, lawyers and business coaches by focusing on the type of value you realize from your investment, based on the provider’s area of specialty. If you’re interested in learning how to reduce cost and pay only for the technology you need when setting up your telecommunication strategy, then visit https://selectcommunications.com/telecom-consulting/.
If you manage bookkeeping with the help of online software, for example, make the process collaborative with your accountant to eliminate data entry redundancy and ensure the information is structured in a way that is usable for the accountant (which can affect the billable hours you ultimately pay). Similarly, legal fees can be managed by consulting with a lawyer only for advice that’s specific to your industry, product or business model, or by using free business document templates such as those offered through reputable sites like Bloomberg BusinessWeek for your more standard legal needs. Similarly, questions about business structure or operations that you may pay a business coach to address likely can be answered free of charge by your local Small Business Administration office, or through membership with your local chamber of commerce.
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