Financial Management Tips for Small Businesses

Most entrepreneurs are more interested in their business ideas and consider financial management as a matter of course. They think if business is good, finance will be just as good. If the business profit, then the money will just flow. This assumption has a point, but can be misleading. It is true, the source of business cash is sales and profits. But business is not just how to make money, but also how to spend and control it.

Financial management is not just how to manage cash. But more than that, financial management is how you manage wealth to generate profits and utilize sources of capital to finance business. Although simple, even small and medium-sized entrepreneurs need to apply the principles of financial management. Here are some basic financial management for small entrepreneurs

1. Separate Personal and Business Money

The most common mistake made by small entrepreneurs in managing finances is mixing business money with personal money. Maybe because the business is still small, you think it doesn’t matter if you mix business money with personal money. But mostly, it is difficult for you to distinguish between personal and business expenses. As a result, personal needs gradually reduce the balance of business money. Separate money physically. If necessary prepare two different boxes or envelopes or money storage purses. Better yet, if you use banking services. Open an account that is specifically used for business. And most importantly, be disciplined in applying this separation.

2. Plan the Use of Money

Even when you have more capital than you think, you still have to plan for the best use of your money. Don’t waste money even though your cash balance seems excessive. Without careful planning, soon you will find yourself in a state of underfunding. Adjust expenditure plans with sales targets and cash receipts. Undermine capital expenditure plans if they do not provide benefits in increasing sales or reducing costs.

3. Make a Financial Logbook

Business is not enough to be managed based on memory, but with complete records. At a minimum, you must have a cash book that records the entry and exit of money. Then match money balances every day with your notes. This is to control the money traffic and ensure no money is tucked. Next, increase your administrative ability to record sales and expenses. No less important, you must also keep track of your outstanding receivables, inventories, and fixed assets. If you can, use a computer system to facilitate the recording process. And it would be better if you could implement an adequate accounting system.

4. Calculate Profits Correctly

Your job as an entrepreneur is to make a profit, but do you know how much profit you have gotten? Calculating profits correctly is as important as generating profits. The most critical part of calculating profits in calculating costs. Most costs can be identified because they involve cash payments. Others do not take the form of cash, such as depreciation and amortization. Some have not yet happened but need to be reserved for future issuance, such as taxes and loan interest.

5. Play Cash Flow Faster

Don’t just focus on profits. Financial management also covers how you manage debt, receivables and merchandise inventory. Many businesses have cash difficulties even though their accounting records show blue numbers. Watch how you rotate cash. Your cash loop is slowing down if your credit sales term is longer than if it’s not, or if you have to store inventory of merchandise. You should try to make credit sales terms the same as your credit purchases. You must also be able to suppress inventory levels in such a way as to be able to fulfill orders but without burdening the finances.

6. Monitor Assets, Debts, and Capital

Periodically, you need to check the inventory in the warehouse and make sure everything is complete and good. But before you can do that, you need to have adequate administration to control all of it. The same thing you need to do with accounts receivable to buyers and bills from suppliers.…

Small Business Development Strategy


The development of small and medium businesses has recently increased quite rapidly. we must realize that having a small and medium business in this era is certainly very promising, especially if we know the strategy of developing small and medium businesses. In developing a business so that it becomes big it is not easy, many aspects must be fulfilled, therefore, for those of you who want to develop your small and medium business, we will share the development strategy.

In starting a business or developing an existing business, of course, you must have the intention and tips that can help you in its development, therefore to support the development of your business you can follow a few tips below:

Choose the Right Location

For small businesses that depend on physical stores, location is one of the most important capital in developing their business. By determining a strategic location (can be close to customers or close to sources of raw materials) will certainly be very influential with your business,

By choosing a location that is close to the customer, of course, the exposure or awareness of your business will be greater so that the possibility of a transaction is also greater. If indeed your type of business requires a constant supply of raw materials, then proximity to the location of raw materials can reduce costs, which in turn can lower selling prices and provide a competitive advantage to your business.

Take advantage of Social Media

Yes in the digital era like now, of course, the role of social media is very powerful in carrying out any activity let alone being used as a medium for marketing your small and medium businesses. With social media, you can do promotions with scalable costs, meaning that costs can be adjusted to your budget and the stage of development of your business.

Another advantage of promoting using social media is Reach or Reach. Social media can reach broader markets both those outside the island or abroad though. How to promote it also varies from making interesting pictures or providing product information with an article presentation to make customers better understand in detail the products you market.

Make Innovations

Customers usually have a boredom and tend to want something new, so that customers do not ‘go’ to another place where we have to provide innovation for our efforts in order to attract them back. This is very important especially for businesses that have many competitors. Therefore innovation is very important to do if you want to develop the business.

Plan your Finances well

Why is this aspect needed in developing small and medium businesses? Due to the fact that many businesses go bankrupt due to errors in financial management, errors in management arise because there is no monitoring of profits and losses. One way for better financial management is a neat recording system and regular financial reporting. Currently, there are many software that can help with this recording. Another advantage of having records and financial statements organized is that it can be used as supporting documents in applying for business loans.…