Many entrepreneurs know or at least intuit that business finance is an art, not just a science. But here’s what a lot of people forget:
Business finance is science too.
So it’s not enough to lose yourself in your projects, to invest time for the sake of your business, and to make personal sacrifices for a vision. The business solutions that you’re marketing aren’t enough. To improve, you might need to apply for a fast approval business loan.
Sure, it helps create products that answer people’s needs, but there’s more to it than that. Keep reading below to find out more.
Why Do You Need These Business Tips?
Managing your business finance is an entirely different animal from running your private finances. Plus, if you’re a new entrepreneur – and, like many startup founders – under 30, your experience could be improved.
And here’s an industry secret: Even the most financially “aware” entrepreneurs out there can get things wrong.
After all, how many people believe that bootstrapping is better than getting a quick loan to invest in new technology? Or how many still scamper on money instead of buying better tools?
So, if you know you don’t know everything about business finance, scroll on.
1. Keep Personal & Business Finance Separate
Many new entrepreneurs see nothing wrong about mixing their personal and business finance. After all, you did use your private money to get your business running, right? So once that company started being successful, it’s only natural for you to use its funds.
But that’s a huge mistake.
The solution is to force yourself to do what every sane parent has to:
Understand that you and your “baby” are separate entities. So:
1. Keep business transactions separate. That way, you’ll know exactly how your company performs, and as a result, you’ll make the best business decisions according to its standing.
2. Use a business account. Business accounts have many features that you’re missing if you’re using a personal account. For instance, you can use more payment solutions, such as PayPal, or you can streamline your invoices. It’s also easier to keep track of your cash flow through specific tools available through your account.
Of course, a business account costs more than a personal account.
That’s one of the main reasons new entrepreneurs prefer to “save” this money and invest it into new materials, product conception, etc. However, operating a business account allows you to apply for trade financing and use a multitude of tools that organise your work.
Basically, even though this account seems more expensive at first, it will save you money in the long term.
2. Invest In Software
Time is money. Saving your time allows you to focus more energy into other business aspects. One of the best business tips, if you want your company to be successful, is to invest wisely.
That term, wisely, is a problem for many new entrepreneurs.
Because you may think that you’re being wise, disciplined, and organised when you’re actually downright wrong.
For example, many new business owners don’t care much about investing in software tools when their companies are young.
They’re trying to protect their business finances, but they’re exposing themselves to a lot of wasted money in the long-term plus a lot of extra work.
Here’s the deal: Old school is only cool if we’re talking music and movies. Not finances.
Outdated tools like Excel will waste your time and people-related resources because this software lacks certain features. For instance, it doesn’t help you plan or manage your income better. As a result, you need to use other resources to make the best business decisions.
There’s another area where you could benefit from the best software:
Paying employees is a monthly affair that’s very time-consuming, especially if you’re running a larger company. If you have to do manual calculations or wait for your monthly bookkeeping when you need to pay so many people’s salaries and CPFs, you’re in deep waters.
There’s an easy solution:
Open a business bank account. These accounts offer low-cost or zero-charge solutions if you’re new on the market and, therefore, not swimming in cash. For example, you can use your account to find out your cash flow position by month. Some software even allows you to see it in advance.
Or you can try other alternatives to Excel.
These software tools will help you plan your resources, schedule regular payments, or manage your tasks better.
Besides, proficient record keeping isn’t just an accountant’s dream.
It can save you a lot of hassle regarding administrative backlog, which ultimately translates into more money and staffing to solve easily avoidable problems.
3. Get A Mentor
When you start a business, the instinct is to strike out on your own. Even if you know you’re going to make mistakes, making them and learning from them has an intense appeal.
After all, entrepreneurs don’t have an employee mentality.
You don’t want to be told what and how to do things.
However, making those mistakes can cost you your entire business. At best, it can set you back a few years.
Then there’s another – possibly more significant blunder:
Trying to copy your competition.
You can very well study what they’re doing and try to mimic their business finance without considering their company’s structure, needs, goals, and basically everything else that’s going on behind their scenes.
Instead, a mentor or financial consultant can help you set things straight.
They can help you understand your specific needs, how to maximise revenues according to what you’re selling, and how to commercialise your products better.
Pro business tip: The Singapore Government is actually giving grants for that, like the Startup SG Founder.
4. Value Plans And Metrics
All successful entrepreneurs rely on their instincts, but one of the biggest mistakes you could make is idealising those gut feelings.
Sure, being a prodigy is important. Having a sixth sense of how your industry moves is essential.
Predicting opportunities and threats is vital.
But careful planning is the backbone of your business finances’ success.
Sure, that can sound dull and confining. You may disregard plans because you don’t want to be stuck in endless meetings. You don’t want to turn into that corporate boomer archetype.
And that’s where you’re wrong.
A well-crafted business plan entails:
– Setting goals
– Establishing steps and instruments to reach those goals
– Setting performance indicators that show whether you’ve got those desired results or not
– Creating alternative solutions
Not having a business plan is like fumbling through a deep fog without knowing where you are, where you need to get, and what you’re risking to get there.
There’s more you probably don’t want to hear:
You need to plan your finances, too, so start with the following metrics:
– Cash flow projection
– Projected income
– Balance sheet statements
– Breakeven analysis for your investments
These metrics tell you:
– Where your business is currently at
– What financial decisions make more sense
– How to attract more funding
– How to get better loans
If you need to cut down on fixed costs such as rental, you can consider using a comfortable co-working space! This helps you cut down on costs while ensuring a professional space for meetings.
Wrapping Up On Business Finance In Singapore
This article took you through some practical business tips to take the reins of your finances. You and your company are distinct entities, so keep your finances separate.
More importantly, remember to rely on careful planning, the help of a mentor, and the best software tools to manage your company’s finances.