Intro:
Wisely managing money is a priority for small businesses, especially new ones. Even if you obtained funding from a financial institution, investor, or family, you must stretch it out.
If your company runs out of financial runway before it starts turning a stable profit, you’ll put yourself in a bad situation. The same is true for solopreneurs.
For example, physical therapists can start their companies with a nominal investment to purchase some equipment and lease a humble space. Once your company gains a solid clientele, you can start scaling it.
In 2022, professionals recommend that entrepreneurs avoid spending on bells and whistles before they have stabilized their operations.
Read this article to learn more about starting a freelance physical therapist company.
Moreover, entrepreneurs have more options available to them now than their predecessors. You can start as a mobile freelancer. Then, lease a storefront when you have saved funds from your revenue stream.
We outline how small businesses can manage their money more wisely.
Monitor Spending
Managing money more wisely for small businesses begins with monitoring spending. Although the statistics have shifted, the number one reason new companies fail in the first few years is lack of cash flow.
It’s OK to keep managing your spending and revenue on paper in the beginning. Excel sheets still have their place in the business world. Writing or typing a list of your company’s spending forces you to review it.
Take action if you notice your spending has become too high compared to your revenue.
Use Software
Once you understand your ongoing business operations expenses and your company’s incoming revenue, incorporate software into the mix.
Excel sheets help business owners operate their companies for several years. Accounting and bookkeeping software lets you dig into the data and gain valuable insights.
Compiling financial reports helps you spot trends. For example, you might spend more on equipment and tools if you order them at the last minute.
You might also discover that your inventory is starting to age in storage. Thus, take action before purchasing more.
Adhere to Deadlines
Business owners must adhere to several deadlines. For example, your staff expects to receive their paychecks on time. Thus, you must make timely deposits to your business bank account.
Other deadlines include paying invoices on time. Otherwise, your suppliers might charge you a penalty. The same goes for outstanding debt, such as loans and credit cards.
Sometimes adhering to deadlines receives a bad wrap in the business world. Some will argue why pay your invoices before the deadline if you can leverage them in your favor?
However, you don’t want to fall into bad habits.
One day an important client might need your company to perform at its best. If your team can’t, you’ll lose the valuable opportunity.
Negotiate with Vendors
Instead of dancing around your financial responsibilities, improve your negotiating skills. Then, negotiate with your vendors.
Negotiating without leverage is tough, so find something you bring to the table. For example, offer to pay your invoices within 15 days of billing for a 10% discount.
Once you establish long-term business relationships, assess them annually. Your financial reports can help you negotiate better prices and terms when you’re loyal to vendors and suppliers.
Find Deals
All companies and solopreneurs need basic office supplies and productivity tools. Therefore, shop the deals.
Spring has turned into a great time to update your computer hardware. Productivity platforms offer free trials and subscription plans that scale with client needs.
Optimize Marketing
All companies require some degree of marketing. The good news is that you can balance costs by adding low-cost digital marketing strategies.
Complement print and promotional item marketing with social media, a website, and SEO elements for a minimal additional cost.
Find Tax Savings
The Internal Revenue Service sees solopreneurs as small business owners too. Therefore, one-person operations benefit from finding tax savings and using them to their advantage.
Examples of small business tax write-offs are:
- Interest
- Depreciation
- Legal fees
- Office supplies
Since you must pay quarterly estimated taxes, find ways to minimize your tax bills legally.
Conclusion
Small business owners and solopreneurs must keep their eyes on their company’s financial health. Managing money more wisely doesn’t require drastic changes. If you adhere to deadlines, you’ll avoid financial penalties and keep clients happy. Using software will help you spot valuable trends.