The core of any business’s success is driving revenue and creating profit. To do this, though, entrepreneurs have to know how to plan their small business’s finances.
Even if you have the best team in the world, your business is bound to fail if you don’t have a solid financial plan.
Tech entrepreneur Brian Colpak explains that the key to this financial plan is finding a balance between spending, borrowing, and selling. Here are some quick tips on how new business owners can plan and seize opportunities without breaking the bank.
Invest in Solid Growth
The saying goes, “It takes money to make money.” You can’t simply throw money around and expect more money to roll in, though.
New business owners should set money aside and search for opportunities to grow. It’s crucial to run a balanced budget daily and not compromise that with investment spending.
Having a separate savings fund dedicated only to investments is a great way to ensure you keep that balanced budget and not miss out on golden opportunities when they pop up.
Don’t Shy Away from Loans
Many business owners cringe at the thought of taking on debt, but not all debt is bad debt. There are times when you will need capital to keep your business running and times when raising money through loans makes sense to fund investments.
A business loan could be a great way to finance the purchase of new equipment or hire new employees. Loans can allow you to keep moving the business forward without jeopardizing your fallback cash on hand.
Because you never know when you might need a loan, it’s essential to maintain solid credit. If your business doesn’t have good credit, you may be turned down to finance equipment, real estate, or other assets.
Plan for Tax Payments
Small business owners will need to pay the IRS estimated tax payments throughout the year. It can be challenging to pay these every quarter, as the IRS requires.
One way to overcome this challenge is to work estimated tax payments into your monthly budget. By paying your taxes monthly rather than quarterly, you can align this expense with all the other typical business expenses, which typically occur monthly.
Focus on Collections
Sales are great, but they don’t pay the bills. Cash pays the bills, and a company only generates money when they collect on their sales.
Brian Colpak says that small business owners need to focus as much attention, energy, and effort on billing and collections as they do on sales. Treat sales as complete only when the collections are made on those sales.
By approaching sales this way, you’ll incentivize your reps to complete the process by collecting the money your company is owed. Dedicating the same effort to collections will also allow you to identify clients who lag on payments.
If you need to speed up collections, you can even create incentive programs for customers to pay upfront, switch to automatic billing or pay early before the due date.
Never forget that sales are nice, but cash is king.
About Brian Colpak
Brian Colpak is a tech entrepreneur and the founder of Continental Global. After spending most of his career in managerial positions, he founded and led a company recognized as one of the top 100 fastest growing companies in Massachusetts before starting his current company. These days his main focus is on an upcoming project in Dubai.
Odyssey has been the lead content writer and content marketer. He has vast experience in the field of writing. His SEO strategies help businesses to gain maximum traffic and success.