A lot of work goes into running a business. You may need to open your store, greet customers, stock shelves, keep your website up to date, complete customers’ orders and a variety of other tasks related to your chosen business. One important element of being a business owner is making financial decisions.
It’s up to you to decide how to accept money from customers, know where and how to borrow money, time your revenue (incoming money) and expenses and make sure your business is making money.
While you may prefer some types of work over others, everything from customer service to financial management is important if you want to start, run and grow a successful company.
Here’s a closer look at what you need to know when it comes to small business finances:
Managing cash flow and expenses
If you’re running a small business, when you get paid can be just as important as how much you get paid. Being able to predict and manage your cash flow — the timing of when you get paid and when you have to pay bills — is an essential skill for success. Manage your cash flow.
Profit and loss
In the end, you need to make more money than you spend to run a successful business. Creating a profit and loss statement, and learning how to read it, could help you identify ways to increase your income, decrease your expenses and make more money. Make a profit.
As a small business owner, you’ll need to decide what types of payment you’ll accept, such as cash, cheque, credit card, debit card, mobile phones, etc. Offering more than one option could help you attract a wider variety of customers and allow your customers to make larger purchases. However, there are advantages, disadvantages and costs associated with each payment type. Learn about different payment options.
One of the first things you may want to do after creating your business is to open a bank account for your business. Having a business bank account could help you keep your personal and business money separate, which can make it easier to keep track of your business’s finances, protect your personal finances in case of business financial challenges and save you time when you need to prepare a tax return. Learn about banking services.
Types of business credit
Businesses can build credit history and credit scores that are separate from their business owner’s credit. Building business credit can make it easier to qualify for a business loan or line of credit (another way to borrow money). Find out how building credit could help your business.