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3 Finance Tips for Small Business Owners

  • February 20, 2020
  • Written by : REIL Capital

Small business owners have a lot to manage.  Their responsibilities can vary from inventory to customers, to most importantly, finances. REIL wants to help make managing your finances easier.  As small business owners, your business is often your biggest asset. Then, it’s typically your house or home. This makes it extremely important for business owners to follow and implement basic personal and business finance guidelines.  

Here are three tips from REIL that small business owners should use to manage their personal and business finances. 

Establish a Safety Net

With any business comes unexpected challenges and tough times.  Is your business properly prepared in case of an emergency or tumultuous times?  If not, it’s critically important you set up an emergency fund for your small business.  

Make sure the account has enough cash or liquidity to cover the months when your income is significantly low.  Typically, many businesses that already have emergency funds tend to keep at least three to six month’s operating expenses. 

Invest and Diversify 

Many small business owners allocate their funds in different ways.  However, it is common that many owners invest their profits and assets back into their business. While this is not a bad idea, it is not the best one.  You should definitely consider setting limits regarding how much money you put into your business. You do not want to escalate your commitment. 

Diversify where you invest your money.  Invest as much money as possible outside of your business and industry sector.  If you put all your funds into that one asset, and it fails, you can be in serious trouble.  Avoid this by simply diversifying your funds and growing your assets. 

Ask for Help 

Running a small business can be hard to manage.  There is so much on your plate that sometimes it can become overwhelming. Fortunately, there are many professionals out there that can help you with your business finances.  Working with a professional can help you factor in all your investments, assets, cash flows, and expected challenges/problems.  

Be ahead of your competition.  Know when to invest, when you qualify for financing, and who you can go to for the process. 

 

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