Five small business finance strategies that can help drive s
By Barbara Melvin
1. MAINTAIN A CASH FLOW FORECAST
Why it’s important: Cash flow is the lifeblood of any business. By projecting cash flow on a
regular basis, you can anticipate potential shortfalls and ensure you have enough liquidity to
cover expenses.
How to do it: Create weekly or monthly cash flow projections that track incoming payments,
outgoing expenses, and your expected balance. This will help you plan for lean periods and
identify when you might need additional capital.
2. SEPARATE PERSONAL AND BUSINESS FINANCES
Why it’s important: Mixing personal and business finances can make it difficult to track profits,
manage taxes, and get clear insights into your business’s performance.
How to do it: Open a separate business checking account and credit card. Keep track of both
business and personal expenses separately to ensure accurate accounting and tax filing.
3. MONITOR AND MINIMIZE DEBT
Why it’s important: While taking on some debt can help you grow, excessive debt can strain
your finances. Managing debt levels allows you to invest in business growth without risking
long-term financial stability.
How to do it: Review your debt regularly, prioritize paying off high-interest debts first, and avoid
taking on unnecessary loans. If you need financing, shop around for the best rates and terms.
4. SET ASIDE EMERGENCY FUNDS
Why it’s important: Having an emergency fund can help you weather unexpected downturns,
economic shifts, or sudden expenses without derailing your operations.
How to do it: Aim to save enough to cover three to six months of business expenses. Set aside a
portion of your profits into a separate emergency savings account.
5. USE ACCOUNTING SOFTWARE OR HIRE A PROFESSIONAL
Why it’s important: Accurate financial records are essential for making informed decisions,
managing taxes, and preparing for growth.
How to do it: Invest in user-friendly accounting software, like QuickBooks or Xero, to track
income, expenses, and taxes. Alternatively, hire an accountant to manage the finances and ensure you comply with tax regulations.
By applying these strategies, you can build a solid foundation for your small business and
position it for long-term financial success.