Starting a business is both exciting and daunting at the same time.
While you’re eager to make your mark in the world, being able to successfully transform your idea into a lucrative business is another. I
n addition to truly understanding the market, you need to have a firm grasp on your finances.
Mastering an organization’s finances is more than just setting a budget and forgetting about it.
You need to create a financial strategy that includes present day cash flow as well as future financial forecasts.
Below are tips to help you grow your business and keep your finances in check.
Create a Realistic Budget
Business growth is, unfortunately, not an easy task to accomplish.
You need to be on the ball with everything, which includes your finances.
This is why you should start with creating a realistic budget.
You might be wondering isn’t every budget realistic?
In a manner of speaking, yes, however, businesses need to be extra thorough with their budget.
This means you shouldn’t add on things you can’t handle.
Incorporating extra expenses into your budget can make it very difficult for you to have any financial freedom for your business.
The money you ultimately save through your budget can help you upgrade your company and even expand your reach.
Perform Financial Forecasting
You wouldn’t invest in the stock market without proper research and ROI forecasting, the same applies to your business.
Financial forecasting is a process where you predict your financial future.
This is done by evaluating your past data, which includes your expenses, sales, revenue, and cash flow.
When it comes to business, it’s very important for you to understand that there are going to be a lot of assumptions, guessing, and facing various unforeseen factors.
We’ve listed the necessary steps to help you perform financial forecasting:
- Assess the current problems
- Gather all the necessary information
- Do a preliminary analysis
- Choose between one of four forecasting methods
- Calculate and evaluate the results
Regarding the forecasting methods, you can choose between straight line, moving average, simple linear regression, and multiple linear regression.
Each method functions differently and most likely will yield different results.
Make sure to weigh the pros and cons of each method before going ahead with your forecasting.
Perform Fleet Optimization
If there’s one thing that can throw a company’s finances completely off balance, it’s the fleet.
Fleets are one of the biggest investments a business can make.
However, you don’t stop paying after the vehicles themselves. Gas prices, fleet maintenance, installing the right software and technology are all expenses you need to continue paying for.
Gas prices can be very expensive as the average price ranges from $3 to $6 depending on the location.
Combine that with the amount of vehicles within your fleet and the quantity of fuel each one can hold.
If your drivers are constantly refueling, then you need to figure out what’s going on. It could be due to random idling or traversing through longer routes.
This is where your fleet management system comes into play. Using electronic logging devices (ELDs) and fuel cards, you can see exactly where the issue lies, and you can solve it accordingly.
Moreover, you can save a lot of money by installing dash cams.
Dash cams prevent you, your drivers, and the company from legal liability.
They can help reduce accidents, lower collision costs, and increase visibility for your drivers. If your fleet has trucks, truck cams are what you want to shop around for.
Invest in Accounting Software
Not everyone is good with numbers, so if you happen to fall within this category, there are plenty of accounting software options that do most of the work for you.
You can choose to go with QuickBooks, Zoho, Xero or Netsuite.
Accounting software is a subscription-based service, so you will be financing a recurring payment.
Each software does have its own pros and cons as well as their own unique pricing.
Research is crucial here because you want to get the most out of your money.
Plan to File Your Taxes
Taxes can be a company’s worst nightmare solely because of how much you must pay each year.
That’s why you should always set aside time to prepare ahead.
As you go over your taxes, it’s in your best interest to be incredibly thorough on where you can find deductions.
Tax deductions can help save your company hundreds, if not thousands, every year.
If you have any difficulty filing, you can always hire a professional accountant to get the job done.
Before calling, make sure to have everything organized, so the process goes smoothly.