Is your business struggling financially? Unable to meet customer demands due to a lack of enough stock or lack of enough money to pay your suppliers on time? Financial management may be your best option to keep your business running successfully.
Starting a business in Kenya is hard due to unfavorable policies, poor infrastructure, and limited access to finances.
With access to finances being a major challenge to business, it is important for you to look for ways to manage your money better. This will help you control how you spend money so as to achieve your financial goals.
A report by Deloitte, about 88.3% of Kenyans do not seek financial advice from financial professionals or institutions but rely on their own intuition or family and friends’ advice.
To run a profitable business you should at the very least come up with a sound financial plan.
Here are quick tips to manage your money properly
- Evaluate your current financial situation
Before making any decision, you should check the current financial situation of your business. Look at the available stock levels, how many sales you make, and how much money you have in the bank.
It is good to review the current financial conditions against the goals you had set up when starting the business.
If you had set some business goals, then you had some sort of business plan to guide your every business undertaking. If not then you need to come up with a comprehensive business plan.
- Come up with a Business plan
A business plan is a blueprint or a roadmap on how to run your business, the steps you are going to take, and your future outlook.
Whether you run a big company or a small business like your local hardware store or salon business you need a business plan to keep the business in check.
The plan helps you assess the potential for growth, the resources you need and the time it will take for your business to be profitable.
You do not want to start a business and put in so much time and money only for it to collapse in a few years’ time.
A plan gives you clarity on what the market looks like, the challenges, what needs to be done, when it should be done, and the possible outcomes.
- Create a budget
Creating a budget is essential to managing your finances. You should determine how much money you expect to bring in and how much you plan to spend each month. This will help you stay on track and keep your business running smoothly.
Aside from creating a budget, you must stick to it in order to control your spending and identify areas for improvement.
You will also need to update your budget regularly to keep it up to date with changing trends and situations in your business and the industry.
- Make use of accounting software
Accounting software can help you keep track of your expenses and income, as well as create reports. This will help you make more informed decisions about your finances.
Manually keeping track of the huge number of transactions and financial data will get harder as the business grows over time. Invoices and payroll management can also be difficult, especially if you have a large number of employees.
Accounting software can help you maintain accurate and up-to-date financial information. Maintaining accurate and up-to-date financial records enables you to make more strategic business decisions.
- Track your spending
Do you know how much money you spend per day, week, or month? If you don’t keep track of your spending, you might end up paying bills you don’t need. In addition, failing to monitor spending can lead to overspending and misuse of funds.
Keeping track of your expenses will help you identify patterns and areas where you may be overspending. This will help you to adjust your budget and make more informed decisions.
- Separate your business and personal funds
Combining your business and personal funds in a single account increases your chances of losing track of how you spend your money. As a result, you may spend your company funds on personal needs and vice versa, resulting in missed growth opportunities and overspending.
Set up a separate company bank account to track deposited and withdrawn business funds, making it easier to keep tabs on your company’s expenses.
- Set up an emergency fund
You should have some money set aside for unexpected expenses and emergencies. This will help you avoid having to take out loans or dip into other funds.
Financial management is critical in any business, regardless of size. Following the above tips and developing sound financial habits can help you gain control of your small business finances.
I hope these tips help you manage your finances. Good luck!
Here is a FREE BUSINESS PLAN TEMPLATE to get you started.
