In most cases small business entrepreneurs don’t have enough funds to hire a team of professional financial advisers. That is why they need to be informed about various financial aspects of running a small business enterprise. In this article we are going to share several fields in which entrepreneurs need to be at least somewhat knowledgeable in order to lead their companies towards financial success and development.
Calculating employees’ payroll
Some employers simply assign their bookkeepers for this task, but if you want to have complete control of your payroll expenses, you need to know a thing or two about employee payroll calculation. From time to time, if your knowledge about the subject runs into a dead end, you can also consult experts to check whether your bookkeepers are calculating employees’ payroll in accordance with labor laws and regulations. Some of the processes you should investigate a little bit further are: local tax insurance requirements and procedures, retirement fund financing, automatic deposit etc. This way you will be able to notice irregularities in payroll calculation process and react before your company losses significant funds.
Small business owners who invest money in various marketing tactics and channels, including: billboards, radio or TV commercials and various forms of digital marketing, should know how much income they generate from every dollar they invest in their campaigns. Without knowing how high their marketing investment return was, they won’t be able to determine whether their marketing campaign was successful.
Today marketing campaign tracking is much easier, thanks to advanced technologies and big data. Services like Facebook Ads Insights or Google Analytics provide us with accurate data that counts the number of visitors, profitability of certain marketing channels or practices and enables us to precisely calculate the return of our marketing investments.
Cash-flow is the thing that keeps your business running, which is why maintaining a constant influx of money is the most important criteria for small business development. Maintaining and calculating current cash flow and predicting future revenue and expenses are all very complex tasks, but it is something each entrepreneur is required to do in order to keep his/her company running. Even companies with huge revenue can be left without a dime, if their cash projection wasn’t done properly. Misleading projections may lead you to invest money you don’t have or take loans you won’t be able to repay.
That’s why cash-flow projections shouldn’t only include past sales and revenue statistics, but also the predictions of future market challenges and advanced analysis of rival businesses. Accurate cash flow projections enable you to plan your future business steps and know exactly how much money you have on your disposal.
One of the things that can completely ruin your small business’s cash-flow is piling amount of bad debt. To prevent this from happening, entrepreneurs need to introduce some innovative debt collection strategies. They need to call their debtors, send e mails and letters and of course discontinue all of their services, until the debt is settled. If none of this works, they should think about hiring a reliable debt collection agency.
Accounting and bookkeeping
Most entrepreneurs hire trained professionals for bookkeeping and accounting tasks, but they too should be able to read their own company’s financial reports. Bookkeeping and accounting requires consistency, proven system, some advanced accounting software, and hours of spreadsheet data inputs. This is maybe a ‘bite too big to chew’ for entrepreneurs who are already in the lack of free time, but the only way to control that their business operation is going smooth is by constantly checking financial statements and bookkeeper’s and accountant’s work.
The more small business entrepreneurs know about finances the better. In the past, people were overly dependent on financial experts, but now when internet gives us the chance to learn financial basics completely free of charge it would be shame to miss the opportunity to upgrade your small business and make it more profitable in the future.