Managing the finances of a new business involves numerous aspects – and inevitably you won’t have time to deal with them all. That is why it is critical that you prioritize your tasks, and focus on the most important areas first. By doing so, you can actually reduce the overall workload involved in managing your finances, as your business’ fundamentals will be that much stronger.
With that in mind, the 4 priorities that should take precedence above and beyond all others are:
Properly structuring the financial part of your business plan
While perennially underestimated, the financial part of your business plan is extremely crucial. It will form the basis of most of your early financial decision and give you yardsticks by which you can measure your success. Although many of your projections may turn out to be inaccurate, the fact that you can know that and compensate for it will be a big help.
Separating business and personal finances
Small businesses in particular often have a lot of overlap between business and personal finances, but you should separate yours as soon as possible so that you can manage both more efficiently (and for credit rating purposes). The same applies to any personal or business debts, as the last thing you want is for one to affect the other.
Keeping track of accounts from day one
From the very first day that you start a business you should keep track of accounts. Assuming you already have a business plan that includes a budget you should be off to a good start – and you should then track bills, expenses, and all other pertinent information. While you may not have a background in accounting, keeping basic accounts for a small business isn’t too difficult and as it grows and becomes more complex you can get help if need be.
Monitoring financial position daily
All these priorities will allow you to monitor your financial position, and you should make it a point to take stock of where you stand daily. By reviewing where you stand on a constant basis, you can make better decisions regarding the direction that you take your business in, and can also identify any issues early on and take steps to address them. Even if you have someone managing your accounts, it is important that you are aware of the financial position your business is in at all times, as ultimately you will be making the decisions.
Assuming you prioritize these aspects of your finances, your business should have a solid foundation and be well-prepared to deal with most challenges. Make no mistake you will still have to focus on other areas involving its finances as your business continues to grow and expand, but at very least you should have the right information to make good decisions on all those fronts when the time comes.