Unless you're starting an accounting business, you likely didn't become an entrepreneur just to run numbers. You had an idea that you were passionate about and wanted to turn it into a way to make a living with the freedom of working for yourself. That freedom comes at a price, however, which is a tremendous amount of responsibility.
As an entrepreneur, you're responsible for every aspect of running a business. That means you need to be comfortable in a lot of different areas, including finance. If this isn't your strong suit, that's okay. Here are six ways to increase your comfort level:
1. Research funding options
As you look to get your business off the ground, finding the right funding is obviously key. This is an important area of small business finances to research, so you can be comfortable in knowing what to expect when the time comes. Options may include bank loans, SBA loans, credit cards, a home equity credit line, crowdfunding, or simply savings.
2. Know how much to pay yourself
Figure out how much your compensation should be to make sure that you're not putting yourself in an uncomfortable financial position, but also not jeopardizing your business by paying yourself too much.
"Should you pay yourself what you need to cover expenses? What your business can afford? The salary you left behind to launch your business? Your best bet is to factor in all three—and a whole lot more," says Entrepreneur Magazine.1 "Obviously, you want your business to succeed and you may be willing to accept a temporary drop in income to make that happen. On the other hand, paying yourself far less than you’re worth, or nothing at all, paints an unrealistic picture of the viability of your business for both you and any investors you hope to appeal to now or in the future."
When you have a solid grasp on how much to pay yourself, you can settle into your entrepreneurial lifestyle much more comfortably.
3. Don't let yourself become unorganized
One of the great sources of discomfort can be disarray. Be sure to keep all finances organized and easily accessible.2 Track all transactions and expenses and never let your knowledge of the exact state of your business escape you. If you're always aware of the big picture, you can feel more comfortable making decisions that will affect it.
Stay on top of bills, and don't wait until it's time to pay them to figure out how much you owe. Likewise, make sure to keep your tax filings and payments current: sales tax, employment taxes, property taxes, etc. Failing to file on time can result in major headaches as well as late fees.3
4. Take the time to learn
You will probably never become comfortable with small business finances if you don't take the time to learn about the basic ins and outs. You can take online courses without the need to go back to school. Check out offerings from providers like Coursera, Khan Academy, Udemy, and others. YouTube also offers a wealth of helpful videos to watch as you have the time.
If you don't know where to start, try searching for phrases like "small business finance courses," or "basics of small business finance." If there are specific aspects of finance that you need to brush up on, seek out videos and articles that take deep dives into these. It may be time-consuming to learn everything you need to know, but the more you can educate yourself, the more comfortable you'll feel moving forward.
Your local SCORE4 office or Small Business Development Center may be a good source of courses designed to acquaint small business owners or operators with the basics of finance, including budgeting, cash flow, and lending options. They also offer in-person counseling and advice.
5. Take advantage of resources at your bank
Your bank manager or business relationship manager can be a valuable source of information about the local economy, as well as assisting you with financial questions. Ask how your bank can help you with tools designed for small businesses, such as business credit cards, point-of-sale terminals, and tools to help you collect accounts receivable efficiently, make deposits without going to the bank, and much more.
6. Talk to your accountant and/or financial advisor regularly
Don't be shy about keeping in regular contact with those who can help you with your finances. Accountants and financial advisors will be able to give you perspective from people who deal with finances for a living. Ask questions and keep them up to date with current developments.
2. This related article contains advice on how to organize your business paperwork: https://nevadasmallbusiness.com/organize-your-business-finances-wisely/
3. This article warns of tax mistakes to avoid: https://nevadasmallbusiness.com/common-tax-mistakes-and-how-to-avoid-them/
4. In Northern Nevada, visit https://northernnevada.score.org/. In Southern Nevada, www.scorelv.org
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A. Member FDIC