Own a business? Well it is your business and your money, right? Well, you may want to think through that a little more. When you take on the dream of business ownership there are many constituents to consider. First there are your supplier-partners. They must be paid and paid promptly. What about your banker? They loan money in good faith and they must be paid timely as well. Then, when you are in a position to bring on employees, your money is their money as well; don’t they have a vested interest in the company success? The IRS and other government entities and of course there is the family. The list goes on. I hope you can see that owning a business, although it is your company, requires a strong sense of fiduciary. We business owners cannot be cavalier with our business finances. Here are some actions to consider with regard to business economics:
Take the lead as CFO
It is okay to delegate and gain help in this specialized area, just don’t abdicate. Review your financial statements with your office manager regularly and insist on having all your questions answered. Use common sense on spending.
Quick Books is a good accounting tool
For the average business owner Quick Books fills the need and is universally accepted. It is easy to use, easy to navigate, and provides enough audit trail and reporting detail to make good decisions. Corrections are easy so there is little chance of getting mired in mis-coding (in other words, you can’t mess it up). Throw away the spreadsheet tracking and do the bookkeeping right.
Use multiple banks
Your credit line can be the life-blood of the company. If your primary bank’s underwriter is having a bad day or takes his/her job too seriously, credit denied! There has to be an alternative so deal with multiple banks with a credit line in each. At Edoc, all deposits go to one bank and disbursements from another, we simply transfer funds to the disbursing institution as needed. Consider keeping your open line of credit as high as possible for emergencies. Increase the line after every good year of operations before it is needed. It is much harder to get when the funds are required. Dealing with only one bank can be dangerous!
Select the right Office Manager
Your CPA is likely very good a taxes and special projects on your behalf but we business owners need ongoing attention. We need an individual “watching our back” so to speak. Hire an office manager with a strong fiduciary responsibility and good business sense. A good office manager will be a self-starter guarding the money and always seeking savings. This person can pay for his/herself in many ways. One word of caution: Even the most trustworthy office managers need separation of duties for security; do your own deposits!
Balance dreams with the numbers
It is natural for entrepreneurs to think big. The caution here is not to let the spending get too far ahead of revenues. Of course we must spend money to make money. Just reflect ahead and be sure the outgo has a potential return and is not about look and feel (i.e. expensive brochures or elaborate office fixtures).
Operate virtually if possible
Operating from home without facility rental (or ownership) is freeing financially and propagating-wise. It is amazing how quickly you can ramp up with unlimited workspace.
Treat your finances as if the money belongs to others; it really does.
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