Become Financially Aware
August 14th is National Financial Awareness Day and this is National Black Business Month. This is a great time to take a moment to re-evaluate your financial situation, and it is also an opportunity to set up your finances if you are a new business. It is important to get your financial house in order to be successful at running your enterprise and hopefully, after this you will have some tactics that you can use in your business to help it grow.
It is well known that Black Owned Businesses have their own hurdles when it comes to funding. You cannot get caught up in only dealing with the issues you face and not take the time to prepare to face them. Knowing that your business will have to be better and more organized, means that you need to take the time to be prepared. If you stay ready you don’t have to get ready.
Prepare a Business Plan
If you want to have a business, or you have already started, you need to make sure that you are coming up with a business plan. The more details and goals with steps you can add the better you will be at accomplishing them. But don’t be deterred, you don’t have to have it all done at first or be perfect from the moment you start. Part of building a business is laying out plans and adjusting as you learn more information. In your business plan you need to identify your market, your competitors, and your different revenue streams. Doing this can help you focus on your selling points and marketing opportunities. You should refer back to this to make sure that as you progress, you are focused on the right goals.
- One of the hardest parts of creating a business plan is the research. Finding ways to compare against large brands can cost money from professional services. Finding information about smaller brands in your area can be almost nonexistent. But doing this work can really help you focus on the critical parts of your business.
Here are Some Business Plan Software Options
Set Clear Financial Goals
One thing that can happen is that when you’re running a business idea through your head, is that you can get a little bit carried away with your assumptions. Now, taking the time to use business plan software, or use Youtube to learn the items you need in your plan, can help you come up with realistic financial goals. Set milestones for yourself for your finances and go back and track your progress.
Setting reasonable and clear goals will help keep you motivated to reach the next one, and provide a measure of accountability for you as well. You will have to check yourself when you miss your goals and assess where the shortfalls may be coming from. This will also help you to make sure you are using your resources in the best way. If you reach the point that you are looking for investors or loans, decision makers will be better able to make solid decisions based on your data and ability to show them a plan.
Along with setting your goals, budgeting is one of the most critical parts of financial planning that you can undertake. Starting a business will require you to spend money long before you make it, and long term goals will require a thoughtful budget plan. This includes reinvestments, marketing, and other associated costs with running a business from travel to banking fees. Make sure you are really thinking about all of the costs associated with your business and how you can break them down.
Separate Personal and Business Finances
Keeping an accurate account of your business finances is very important. You need to make sure that you are keeping the funds for your business separate as much as possible. This helps you to stick to budgeting, financial planning, and spending targets. Many small entrepreneurs look over this, especially in the beginning when they are funding the business out of their own pockets. It is something that you should take into consideration. This will help you to track your costs better and allow you to really stick to your budgets and goals. It also is a help when it comes down to tax season.
Another way to separate and monitor your finances is to invest in financial software. At the very least, keeping detailed spreadsheets can help you in monitoring your finances. As your business grows, it may be more complicated to manage your money so make sure that you speak with an accountant as well as choose a book keeping system.
Here are Some Financial Software Options
Establish Good Credit
If it’s one thing that has been discussed ad-nauseum in the black business and finance communities over the past few years is the importance of good credit habits. These are harder to enact than they are to discuss but you have to take steps towards establishing that your business can be a reliable credit partner. Using separate accounts is a good way to get started. It allows you to track the spending of your business and avoid funds being misused.
If you have the ability to get a specific credit card in your personal name to use for your business, it can help you to set up good practices for the future. Making sure you have a business account at a solid bank and develop a relationship where possible with the business development representatives can open up a world of options.Make sure that when you are using credit, that you are taking calculated risks and not saddling yourself or your business with more debt than it can handle with its cash flow.
Manage Your Cash Flow
A lot of these terms seem similar, but they all have nuance to them. Managing your cash flow is a very specific act that includes managing accounts receivable, invoices, payments, and balances. There are so many types of businesses so some of these may not apply to you but invoices can be ones sent to you by vendors for products and services or sent by you to others for your services or products. Accounts receivable is when you are keeping track of money and payments that are owed to you by others. Making sure that there is some balance between all of these will be integral to keeping your business growing. There will be times when cash flow will be greater in one area than another, have a plan. You have to get an idea of what the next weeks and months ahead should be in cash flow to determine if your business strategy is working.
As a business owner, your goal is to turn your products into profits. The most important aspect of your business outside of the services or items themselves is the finances and money management. Understanding ways to make your money management process easier to manage can help to remove the stress and anxiety of it. Financial education isn’t just about the large things, but making sure that you have a solid foundation from which to launch your business so that it has a long term future.