Every small business owner knows that it’s no easy feat to take on the role of CEO. While you may have started it because you want to pursue one specific passion, there are many more duties that follow this title, such as financial literacy. As a small business owner, you must know how to properly manage your business’ finances in order for your business to succeed. Luckily, you don’t need a background in finance to do so. We’re going to share five financial skills that will help you succeed as a small business owner.
Understanding your financial statements
Depending on how long you’ve been running your business, you’ve probably already realized that there are a lot of financial statements. Some of the most important ones to focus on are balance sheets, income statements and cash flow statements. These will help you make projections to how your company is doing.
Bookkeeping
Bookkeeping refers to the ongoing recording of your daily transactions. There are third party platforms available for this or you can hire someone else to do this for you. Whatever you do though, building and maintaining the above financial statements is done through bookkeeping.
Budgeting
How much you spend will directly impact your profit, which is why you need to budget. By creating a budget, you’ll have a better look at spending habits and be able to plan better for the future of your business.
Invoicing
Tracking payments as a small business owner can get difficult if you lose track of late payments, if you’ve sent the invoice, etc. You need a system that keeps you organized and on top of your payment system.
Building business credit
Business credit proves your ability to pay debt and is used to assess risk. There are many different ways to build credit, such as keeping business and personal finances separate, forming a corporation and regularly monitoring your business credit score.
These are several ways you can begin building healthy financial habits as a small business owner. If you are looking for more guidance, you can reach out to schedule a session with Mark here.
