Statistics show that only about half of businesses survive their first four years. One of the biggest reasons both big and small businesses fail is due to financial troubles whether that be from not managing money correctly; not being able to afford supplies, equipment, and/or rent to stay in business; and/or merely not being profitable. The slim survival rate of businesses often scares prospective and new business owners. Due to such worries, some may give up their dream of owning a business for fear that it will never be a profitable venture.
While the statistics surrounding business survival are hair-raising, the good news is that many businesses still do financially well. Regardless of the success of a business, finances are still a critical aspect of a business and must be managed properly to ensure it stays afloat for years to come.
In turn of more accurate finances, you will be able to have a better idea of the future success of your business. The bigger your business, the larger your business expenses, and the more profit you rake in from the business, the more important it is to have a separate business bank account. By having a separate bank account for your business, tracking business expenses and profit will be easier than ever before.
Likewise, keeping your business’s finances separate from your personal finances gives you greater control over your spending habits. This way, you can see where your finances are going wrong and can fix them before they get worse and potentially lead to the destruction of your business. One of the biggest mistakes a business owner could do, especially when running a larger company, is to wait until the end of the year or right before paying taxes to log and track business expenses. Waiting to track your expenses encourages you to spend more money throughout the year. After all, if you do not know how much you have spent, it is easy to spend more. When you track your business expenses as you make them, this not only gives you a better perspective over your spending habits but logging your expenses as you go gives you less work to do later on. Clearly, your business is important, as is the profit you bring in from your business. However, your personal finances always come first. Your home’s rent or property taxes, groceries, water and gas bills, and the like should be a priority over the expenses of your business. After your personal finances are cared for, your business financial needs come second.
Imagine if you lost everything in your personal life: your home, your car, the money in your personal bank account, everything. While you would still have your business, if your business goes under, you’ll be losing that too. While your business may be a primary or sole source of income, at least you can always find another source of income before your personal finances crumble. A common reason why many businesses fail is due to the push for expansion. Some business owners get eager to expand way too soon in business. Why? Because it means they can have an easier time competing against their rivals and make more money. However, this is not always the case. Expansion typically involves a lot of money, money a business owner may not have.
Even if you think your business desperately needs expansion, make sure the finances are there to do so. A lesson every business owner should know is to never expand before a business is financially or physically ready, and never overexpand when a business is ready. Expanding too rapidly or at a time when consumers are not ready for it is essentially a death wish for a business.
Organizing your finances properly is important, even for small business owners. If numbers and organization aren’t your strong suits, using bookkeeping and account software can help you keep your finances all in one place with an easy-to-navigate interface, giving you more time to put back into your business and less time worrying about organizing finances.
From aiding you with payroll to helping you with regular operations like tax management and budgeting, there is a lot these programs can do for you and your business. Numerous software’s for different types of business, including special restaurant accounting software, exist on the market today.
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