5 Ways To Manage Your business finances During Uncertainty
Now more than ever is the time to manage your business finances wisely. For many business owners, the past few months has left financial loss and uncertainty. It has forced us all to focus more closely on the financial side of our businesses and pivot in creative ways to maintain revenue and make sure bills are paid - all while trying to maintain customer and client engagement. We know it can be challenging and overwhelming, but we’ve partnered with Vancity to put together this blog post sharing 5 ways you can take control of your finances starting today.
1. EDUCATE YOURSELF ON THE BASICS OF BUSINESS FINANCES.
That’s right, it’s time to get that student hat back on again and learn your financial basics! No shame here, financial literacy is not a natural skill for most people, but it doesn’t mean you can’t learn and become an expert by putting in the work. Your business will be better off because of it and you’ll be empowered by knowing your numbers and exactly what you need in difficult situations. This is the first step toward financial empowerment!
Learn the components that make up your small business financial plan, which should include:
Personal financial statement
Balance sheet
Cash flow forecast and cash flow statement
Income statement
Accounting ledger
Supporting documents for taxation, insurance, real estate, etc.
To get you started, here are some resources we’ve found helpful:
LinkedIn Learning: Under their premium subscription you can have full access to their learning platform which has a variety of courses including business financial basics. Click here for more info.
Fund Through: This article outlines great questions to get you started in educating yourself on your business financials.
Find a Bookkeeper or Accountant who you can consult with. We recommend Anthea who is a member of our Mastermind: www.clearmarginconsulting.com
2. KEEP YOUR BUSINESS AND PERSONAL ACCOUNTS SEPARATE.
Save yourself the headache of looking through one credit card statement and trying to figure out what was spent on office supplies and staff lunches versus self-care indulgences, and set up a separate business account with a business credit card. Your accountant will thank you later for simplifying the process for taxes!
There are many banks that provide great business account programs, but it can be hard to know which one to go with. We’ve partnered with Vancity to bring you quality financial guidance. They have been ranked the #1 Bank in Canada by Forbes; Vancity doesn’t just provide you business banking and financial support, but they partner with your business to find ways to help beyond finance. Whether that is by creating opportunities for meetings, or creating connections or support on the business planning, Vancity goes beyond a bank to be a partner in your business endeavor. To sweeten the deal, Vancity currently is doing a $200 ‘become a member’ incentive which you can learn more about at https://getyourshare.ca/vancity while using the code: business.
As a credit union, Vancity is owned by their members making decisions driven by their members and to benefit their local community. They have a vested interest in seeing local businesses thrive because without them we have no real local economy!
Also, check out this article by American Express that provides 10 tips and tricks on how to keep personal and business finances separate!
3. START TRACKING YOUR INCOME AND EXPENSES AND CREATE AN EMERGENCY FUND.
Now that you’ve set up a business account and business credit card, it’s time to start tracking all of your expenses and income. One advantage of being a small business owner is that many business expenses are tax deductible. Furthering your education through an online course? Stocking up on coffee for your employees? Write it off. At the same time, avoid the temptation to use the business card for personal needs. Not only will separating expenses make things easier for your accountant come tax time, but you also protect yourself by keeping a spotless financial record and continuing to keep the receipts separate that can save you so much headache down the road as your company grows.
Tip #1 - Store receipts appropriately. There are two ways you can do this, either by paper or digitally. We highly recommend digitizing your receipts, which has been made easy by apps such as HubDoc and Receipt Bank. You simply take a photo of your receipt which is then stored digitally on your account to be categorized.
Tip #2 - Track your expenses. There are two main ways you can go about this: a spreadsheet or an online accounting software such as Quickbooks and FreshBooks. We recommend accounting softwares because they make categorization easy and predetermined to help save time. However, we further recommend hiring an accountant to do your bookkeeping.
Check out this article from FreshBooks for more tips.
Once you have a good tracking system set up, you can start to look at ways you can save, cut expense, and put money away into an emergency fund. An emergency fund is money set aside to cover 3-6 months of expenses. That way, if anything happens to your business or in your personal life you have a safety net that can carry you through.
4. CONNECT WITH A GREAT ACCOUNTANT THAT CAN HELP YOU PREPARE FOR TAX SEASON.
We all know as small business owners that we try to cut down costs as much as possible. However, we highly recommend making space in your budget for a small business accountant. Trust us, you will not regret hiring a professional to take care of all the financial details of your business. These are the main things that an accountant can help you with:
Identify every tax deduction you're entitled to take.
Recognize problems (such as disappearing inventory, increased costs for products or equipment, or customers who aren't paying on time) before they have a chance to bring down your business.
Maintain your cash flow at acceptable levels.
Point out potential areas of growth by analyzing pricing, cash flow patterns, inventory management and types of business financing.
Put together the financial reports you need to get loans and investment.
Prepare your tax returns quickly and accurately.
We find these things hard to argue with! So how do you find an amazing accountant? Check out this article from The Balance for tips on how to find the right accountant for your business and what questions to ask.
5. START DOING YOUR RESEARCH AND KNOW WHAT RESOURCES ARE AVAILABLE FOR YOUR BUSINESS.
Thankfully there are many resources out there for small businesses to receive various types of funding. It is important for you to know what is out there to support your business so you can begin to take control again.
Last month we put together a Small Business Covid-19 Financial Resource Guide to help you in your search. We did extensive research and compiled a comprehensive list of financial resources to help get you started.
In addition, Vancity has provided funding options for small businesses to help during this turbulent transition:
Vancity Pivot Loan- Designed to help established businesses receive an interest free loan to help them pivot their business to meet the new demands in a COVID world. You can learn more about it here.
Vancity Bridge Loan – Designed for solo-preneurs and freelancers who need an interest free bridge loan up to 10k to support in the interim. You can learn more about that here.
Support Local BC- Vancity is proud to partner with Think Local First on Support Local BC, an online marketplace supporting small businesses. Support Local BC sells gift certificates to generate cash flow during COVID-19. You can learn more about it here- and you can submit your business here
During uncertain times, it is understandable to feel worried or anxious Money. But by becoming more educated on your finances, managing your spending, and being educated on the resources available it can ease your stress. Take the time to educate yourself and you’ll increase your confidence not only in your finances but with your business as a whole.
Vancity Business Member Testimonial
Tania from Olive and Piper
I've been banking with Vancity since 1991, for my personal and business needs. Through all my years with them, they've always given me great advice and support to help me achieve my financial goals - whether that's the debt consolidation loan they helped me set up (when I was young and irresponsible!), how to save for the future, understanding mortgages, or learning about investment options.
Being unfamiliar with financial things (they don't teach you that stuff in school), it's really important for me to be able to trust that the institution I'm with understands me and has my best interests in mind. I love the personal connection I have with them, especially my account manager, and I also love how involved they are with the community. Vancity gets me, and that's why I'm still here!
