Congratulations! You finally took the plunge and started your small business. This is an exciting time, but there are important financial considerations you should keep in mind. Use these tips to ensure you stay afloat and reach important milestones.
1. Consider insurance
Small-business insurance can save your business during unforeseen difficulties.The COVID-19 pandemic is a great example of this. Check out Budget Insurance’s Errors & Omissions Insurance and small-business insurance options, which offer cover for your different needs.
2. Find a mentor
The best way to learn the ropes is to draw from someone else’s experience.A mentor can guide you through tricky processes and give you tips for success.Some of the best ways to find a mentor in the small-business industry are:
- asking someone that you already know (e.g. a friend or old colleague who has successfully been running a small business)
- approaching industry professionals at networking events
- reaching out to someone you admire on LinkedIn or Instagram
Tip: If you decide to approach someone new, try getting to know them before asking them to mentor you. Break the ice by taking time to engage with them in person or online. Don’t be pushy if they aren’t interested though!
3. Set realistic goals
Rome wasn’t built in a day and the same goes for your business! In fact, most small businesses can take between two and four years to become profitable. And the best way to achieve results is to set achievable goals. When setting your financial goals prioritise:
- creating an accurate budget (comprised of all your expenses, including labour costs, supplies and emergency costs)
- calculating how much money you’d like to save to reinvest
- keeping tax in mind, particularly important dates surrounding it such as the end or beginning of the financial year
- understanding all risks involved (if, for example, you have investors or taken on debt)
If you’re unsure of anything, chat with a financial advisor who can help you.
4. Track your progress
The only way to review your progress is to maintain accurate records. Here are a few ways to monitor your finances:
- Use budgeting apps like Mint, PocketGuard and QuickBooks to track your money.
- Create a spreadsheet to store all your financial records and business activities.
- Use your phone’s calendar or Google Calendar for important dates, like payment deadlines.
5. Be extra careful with debt
Credit can help you with the finances you need to get your business going initially, but you should manage it well. Use these tips:
- Chat to a debt or financial advisor before taking on loans or credit cards.
- Build good credit by making repayments on time and always paying at least the minimum monthly instalment.
- Never take on more credit than you can afford.
- Understand interest rates and how it works.
Find more finance- and business-related tips in these blog articles:
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