Starting a business isn't easy
Running a small business or freelancing career is no easy task— especially when your finances get involved.
You might often find yourself thinking that everyone has an opinion on how you should spend your capital or what to invest in. The sad thing about it is, there’s rarely a one-size-fits-all answer to this question.
While it’s important to research the industry you’re planning to get into, most people simply start wherever they can.
By utilizing skills from home-cooked goods to crafts and digital creative services, entrepreneurs can build on what they already have. Then, establish their brand and slowly grow their business from one customer to thousands.
Beyond that, you might usually be at a loss in figuring out important business functions that run behind the scenes. Managing your team, fixing payroll, or *gasp* handling your business’ finances.
But most times, you don’t have to start from scratch— tips, tricks, and knowledge are abundant from veterans who’ve walked the long, and hard path of entrepreneurship.
From years of experience running and thriving with their companies, mentors can give new entrepreneurs or freelancers a leg up over their competition.
Best of all, these great tips can improve how to manage your financial path from here on out— in and out of business.
Here are some of the best tips we’ve found useful for you:
Power to the Little People: Vital Business Finance Tips to Know
1. Keep business and personal finances separate
It’s tempting, especially for entrepreneurs and freelancers, to dip into personal funds to fuel one’s business, earmarking it as part of their “capital.” Conversely, it’s also tempting to use some of your business income to facilitate personal purchases. This is a massive mistake. The best thing to do to split business from play is to get two bank accounts: one for business and the other for personal use.
One awesome tip *wink*: Open a digital banking account with NextPay to keep track of what you’re spending and receiving for your business— NextPay’s easy-to-understand platform helps you understand your finances easily with a simple dashboard for easier and more accurate bookkeeping.
2. Set your budget
Once you have a dedicated account for your business, it’s a lot easier to see what you’re working with and to set a budget. One of the most critical business finance tips that experts suggest is to keep close track of what you’re spending, what it’s for, and how much you’re earning back. This is why a digital bank account or banking system like NextPay’s is even more convenient—it allows you to access your statements in real-time and see what’s coming in and out of your account.
3. Freelancers should measure money in hours
Entrepreneurs and freelancers need to seriously consider and implement a money-tracking system that measures in hours, especially for people who make handcrafted items, or creatives who provide intangible creations such as designs and content. Calculate how much you can do in an hour or how long it takes for you to make an item and price it accordingly. Not only does this allow you to gauge the price of your time and effort correctly, but it also keeps you honest. When you think about dipping into your profits for personal use, it’s easier to see how long it will take you to make this money back.
4. Get it in writing— always
For some experts, the best business financial tip a freelancer could get is to remember the same thing that lawyers worldwide recommend: get it in writing. A contract is essential. Never go by verbal agreement, which can ALWAYS be easily reneged.
To protect your business interests and prevent you from potentially wasting money, time, and effort, you need to establish a legally binding contract. Get started by setting up both an official invoice and receipt for transactions with clients.
5. Be proactive in tracking your payments and getting them promptly
There are horror stories aplenty about entrepreneurs and freelancers chasing down payments from a client. But it’s critical to do it no matter how uncomfortable it may seem. You can’t expect your clients to do it on their own. Make sure to send an invoice to your client— outline payment methods (traditional banking, digital banking, or other payment systems), and give them plenty of avenues to do so, just so they don’t have an excuse to not pay on time. his protects your finances from clients who attempt to ghost you, or suddenly refuse to pay the total cost after the downpayment.
Starting a business or online career is challenging, but one that is easily surmounted with the right tools and understanding of processes. Experience may be the best teacher, but preparation before the war can lead to countless victories.
Business tips like the ones we shared are just some of the many things you can use to improve how you work and streamline your financial processes.
Moreover, standing by these reminders ultimately protects you and your business from financial harm.
These financial management tips and reminders help you build your business on a solid foundation so it stands strong as you move up and scale.
One important business finance tip is to carefully sort out your funds. NextPay lets you get paid easier, with better transparency., Organize your capital with our easy-to-use online platform— get started with organizing your business’ finances today with NextPay. Sign up for your free account here.