The Core of Your Business-Finance!

Finance and Your Business

Your business is an extension of you. Not a day goes by that you aren?t thinking about how to do it better, increase profits, or manage it more efficiently. Managing the finances of your company encompasses far more than keeping a balanced ledger, or paying employees on time. Finance refers to the process of collecting appropriate information, assessing the data collected, and then making wise decisions based on that information. So we are going to look at two key components of your business finances: Management and Investments.

Managing Your Company Finances

Whether you own a Mom and Pop enterprise, or a rapidly expanding company, someone needs to be charged with the task of managing the finances. Too many small business owners get stuck in the trap of trying to do it all themselves. Sound financial management must include the cash management of accounts payable and receivable, payroll, taxes, petty cash, inventory and ordering supplies. While it is certainly possible for one person to oversee these activities, that decision comes at a cost. Incorrect or late taxes can be costly. Time spent on bookkeeping is not spent on other activities like marketing and interacting with your customers. Delegating wisely will also allow you to groom your team to meet your needs.

Consider passing some of your basic cash management duties on to trusted employees, a bookkeeper or CPA. While you will still want to be involved in and aware of activities, many of these things - like tallying petty cash receipts, is a waste of your valuable time. While your bookkeeper computes your Sales and Use tax, you can use that time to grow your business, and consider how to invest for future growth.

Finding the Right Investment for Your Company

Once you have a trusted team in place to help you with the financial management, you can devote some time and thought to the allocation of funds. Assuming that the goal is to reinvest in your business, there are some basic distinctions to make. First of all, is it more appropriate to look at short-term or long-term investments?

Short-term solutions, like money markets, are advisable if you are a start-up, or if your business is growing rapidly. Since you may need quick access to your funds, the liquidity provided by a money market would be appropriate. Decisions to invest long-term will depend upon multiple factors, such as, the consistency of your cash flow, the short and long-term goals for your business (do you intend to sell, expand or merge?), and your comfort with and knowledge of the various investment vehicles.

Again, you should assemble a team of knowledgeable professionals: an investment advisor, your banker, a business lawyer, and your CPA. Anyone who has more knowledge than you do should be on this list. You are still the boss! You?ve heard the saying, ?Aspire to be the dumbest person in the room.? Well, this is where it applies. While you are learning about the different areas of finance, and the best ways to help your money help your business, these are the people to answer your questions.

Knowing Your Numbers

Whether you create financial bar graphs from your software program, or hire someone to get those numbers for you, it?s your job to make sense of them. From inventory to long-term investments, no one cares for your business like you do. So invest the time in seeking out a great team to help where you are weak, analyze the needs of your company, and you will be in control of your business finances.