Two Principles To Remember

When it comes to business success, you will need to consider these two principles as far as how money management goes.

First, consider this:  You should only be spending money when there is a potential to earn money from that expense.

It is self explanatory, isn’t it?  You should not be making an investment in your business, especially a small business owner, unless it will allow you to make more money as the end and direct result.

Secondly, consider this:  “If it is not revenue, it is an expense.”

How does that play into the business that you are currently running?  Does it offer you the ability to make ends meet successfully?  Do you make purchases without careful thought about those dollars?  If it is not revenue to you, it is an expense.

Managing your cash flow successfully will allow your business to bank funds instead of to loose funds.  When you do this successfully, your business has the potential to be a long term success.  If you want to be there in the future, manage your cash successfully, with an eye on just about every dollar you have.

Its Not Being Cheap, Its Being Smart
Although it may sound like we are telling you to be frugal or cheap with your business, you need to insure that the funds that you are spending will be funds that are spent wisely, without waste.

Don’t Think You Need To?

If you do not think that you need to do this type of detailed accounting of your business, you are setting yourself up for a big failure.  Now, that is not to say that you can not make a profit by being sloppy, but remember, we are talking about the long term here.

Even very large, international companies are very careful about where every penny that they spend goes.  After all, this is money that could be doing something for the business, right?  It does not matter if you have hundreds of dollars to budget or billions, tight money management is the key to successfully funding any business through good and bad times.

In addition, make sure you are monitoring these numbers as well.  It does not do you any good to put in place a system and to use it but not to utilize it to the fullest extent.  The fact is that you should be doing these things:

1. Determine where money is going and if it is being done accurately.
2. Determine where you can cut back in costs and expenses.
3. Determine what you can do differently for less funds so without jeopardizing the actual quality of your business.

Being a bit tight wadded with your business is not a bad thing, assuming that you take care of all aspects of the business’s need including reinvesting and growth potential as well.

Managing Money Principles

What makes you profitable as a business owner?  In the next chapter, we will look at the ways in which you must manage your cash flow and assets if you plan to have money in your pocket in the long term.

Do you have the ability to think about, analyze and then finally decide on business related decisions? 

As we have discussed, your ability to do these things is what will hold you back or launch you forward today as well as well into the future.  Now, take those ideas and determine just how well they fit into your ability to make decisions about your business success where it counts:  the profit margin.

Throughout this chapter will we will talk about several aspects in detail, allowing you to fully understand what you need to do to be successful in regards to your business’s profitability.