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.


Controlling Your Money, Correctly

Do you have what it takes to manage your money?  If not, it is time to find someone that can and will do it for you.  Without tight control over the finances in your business, there is no telling what the future may or may not hold.  That does not mean that you can not spend money.  This is a huge mistake that people make. 

Instead, as the entrepreneur and business owner, you need to learn to spend money the right way instead.

The first thing for you to do is to determine a budget for your business success.  This should be an overall budget at first.  Things to consider include:

1. Managing expenses that will continue to keep the business up and running well.
2. Managing your business’s debt due to growth or to start up costs (to pay them down successfully.)
3. Managing profit to if available must be done with an idea of how much will be spent on investing back into the business and what will go towards other beneficial needs the business has.

The budget should be done carefully, with a good deal of thought placed on each of these areas.  Instead of a dollar mount, the budget of the business should be done by percentages. 

Perhaps 20 percent of the profit will go towards investment back into the business whereas the rest of the profit will go to paying down debt.  Whatever percentages you are comfortable with should be taken into consideration here.

Beyond the budget aspect of managing funds is the strictly organization aspects that need to be taken care of.  Good quality, detailed accounting and bookkeeping needs to be done to manage the business’s overall success and funds to a T. 

In addition, there needs to measures put in place to manage unexpected expenses and even just making sure that everything is accounted for.

Although this seems obvious to note, plenty of businesses fail because of poor money management in the beginning stages.  Do not get caught in the “I don’t have time now, I will do it later” scam.  Without doing this from the beginning, it will not happen throughout your business.