How To Manage Your Small Retail Business Finances

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How To Manage Your Small Retail Business Finances

The financial part of running a company can be daunting, especially if you’re someone who isn’t particularly interested in the financial aspect of running a company. However, learning how to manage your company’s finances will help you keep your retail business afloat and keep your organisation’s cash flow flowing.

And, what every owner who’s starting a business in South Africa needs to understand when it comes to managing your finances is the importance of educating yourself. By learning and understanding how to do simple bookkeeping and financing for your company, you are ensuring your business has a strong financial foundation. Because, even if you have accountants, it’s still your company and you must understand and have a clear picture of what’s happening with your books. For example; understand accounting tasks, how to apply for retail finance when in need, know what types of business financing is available and draft your organisation’s financial statement. So, an additional thing to learn how to manage your finances, read the article below.

Know your business’s daily money management

It’s important to stay on top of your company’s daily money management. And, even if you’re fortunate enough to have an account manager and a team who takes care of your finances, you also need to be involved. This does not mean you need to micromanage your team, it simply means being invested in the admin of where your business is at in terms of money. So, here’s how you can manage your company’s money daily:

  • Make sure you properly manage your accounts.
  • Have a day where you review your expenses. Because, we all know even in our personal lives that expenses can quickly add up, especially when you’re not keeping an eye on things. So, always make sure you check and track your spending.
  • Always have a clear financial projection for your company as this will ensure your business is prepared for any emergencies.
  • Be on top of your game when it comes to invoices. This means that you should always send out all invoices, set your payment terms to seven days to ensure that all payments go through and you’re not losing money. Lastly, always follow on the invoices that you’ve sent.

Separate your private and company bank account

The moment you decide to start a company, you need to open up a separate bank account for it. Having two different accounts will make things easier and clearer, ensuring you keep accurate bookkeeping. If you don’t have a private and company account, tracking your expenses can be a difficult task. This can lead to you forgetting or missing crucial information. Plus, the bigger your retail business grows, the more chaotic bookkeeping will become, and that can be avoided by having separate accounts. Having a bank account for your retail company will also ensure you can see exactly what has been going on per annum, making your accountant’s job easier. And, more importantly, you want your retail store to seem legitimate and professional, and having one account may not help with what you’re aiming to achieve.

Invest in the growth of your business

The retail industry is fast-paced, and staying in line with your competitors is important. And, one way of achieving this is by growing your company. And, yes you may be thinking how expensive all this sounds. And, sometimes it may be difficult to put large amounts of money aside for the growth of your organisation. This is especially the case when you’re trying to get your feet off the ground. However, there are ways of financing a small business growth like getting business financing from a reputable lender. Financial service providers have various small business loans available to help SME business owners to grow their company and take it into new heights. There are numerous directions you can take to grow your retail business, but sometimes all it takes is revamping your office space to ensure it’s appealing to customers. Or, purchasing equipment that can help fasten production. Sometimes growth is simply about giving your customers an experience every time they walk into your store. By making your customers feel welcomed, listened to and important can help to retain and bring in more loyal customers. So, once you’ve decided what you need to improve your business and foster growth, then take a look at business finance application forms and see what they entail and get started.

Make it a habit to pay yourself first

Yes, we’re sure you’re looking at your screen right now asking yourself “why should I pay myself first?” This is mostly the case for many small company owners, who’s business just started running successfully. But, you need to put that into practice, not only because you need a monthly income to sustain yourself. But, it can work as a safety net for you in the future should anything go wrong. This is not to say you have to pay yourself a large amount of money. No, this simply means that you’re allowed to take a small portion of your profit. For example, you can pay yourself 10 percent of your earnings.

This isn’t a large amount of money, but it can make a difference and remind you why you’re doing this in the first place. Because let’s face it, there will be times when you reach your lowest end. This can be because business is slow or you’re not reaching your target market the way you’ve hoped. But, when you start paying yourself, you can see for yourself that your retail company is making a profit and you can get something out of it too. Reminding you why you decided to start this company in the first place. But, key takeaway when paying yourself is to remember to be frugal. Don’t make large payments to yourself simply because you’re the owner and you can afford it. Make small payments that will allow you to live and pay your bills.

Always aim to have enough capital

Well, coming from the previous point about paying yourself, it’s important to mention this too.  Having a substantial amount of capital ensures your business’s financial health and contributes to the operational success of your store.

However, in most cases, some SMEs do not have an abundant amount of capital to help them get through the startup phase of their business. This is a problem that won’t help your business in the long run. So, to be on the safe side, set up an emergency fund for your personal expenses as well as your business’s rather than dipping into your cash flow. This will ensure you stay afloat for anything that might happen in the future.

Be careful how you spend your money

Even if your business booms to success, it’s vital that you’re careful how you spend money. And, always remember that you’re still starting, and even though it may be at its peak now, we have seen in the past that businesses can fail at some point. Therefore, it’s crucial to budget and plan carefully. And, fortunately, there are financial tools for budgeting like a budget calculator that can help make tracking your finances much easier. So, use them to your advantage.

Final thoughts

Dealing with money isn’t for the faint of heart, especially when it comes to business. This is why it’s vital that you educate yourself more on finances to ensure you’re able to manage your retail business, even when it becomes bigger. And, remember that even with accountants, you need to be aware. Because we have heard of companies being scammed by trusted executives; therefore, it’s up to you to ensure everything is above board.

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