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    The inability of a business owner to effectively manage his or her business finances is one of the many factors that lead to business failures. In business, finance plays a crucial role in the profitability and survival of such a business. As a small business owner, you must therefore ensure you are adequately taking care of your business finances. Your survival in the business will depend a great deal on this.  In this post, I will be sharing with you 3 simple ways you can get started with managing your business finances. 
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Get Organized, Keep Records

In order to get started in managing your business finances, you need to develop a system of effective record keeping. This is where financial mismanagement begins in business. Most small business owners have no record at all in their business. Some who do, don’t have an organized record. Many keep records in pieces of papers that entering their offices, you may see flying around.  As a small business owner, you need to be intentional about your system of record keeping. Opening a simple income and expenses ledger will go a long way in helping you understand the true financial position of your business.  

Separate Your Funds

One hundred percent of your business’ capital may have come entirely from you. That should not be the reason for you to use funds from your business to manage yourself. As a business owner, you have to understand that the moment you set up your business, you are setting up something that is entirely different from you. If your business is, therefore, different from you, then you must ensure your business finances are separate from your personal finances.  There are two simple ways you can do this – 
  • Open a Different Bank Account for Your Business
In Nigeria, for you to open a bank account in the name of your business, you will need to register the business with the Corporate Affairs Commission. There are many options to choose from when it comes to registering your business with the Corporate Affairs Commission.  With as low as 12,000 Naira, you can register a business name in Nigeria. With a business name registration, you can easily create a bank account in the name of your business with any bank in Nigeria. If you truly take your business seriously, then you should have it registered.
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  • Place Yourself On Salary 
As stated earlier, you are different from your business. You must therefore see and treat yourself as such. Treat yourself as a staff of your business. Specify the limit to the amount of money that can go to you from time to time from your business, by placing yourself on salary, just like every other staff in the business. 

Hire An Accountant Or Auditor

Hiring an accountant for your business may seem unreasonable to you. However, the benefits of hiring an accountant for your business far outweighs any other reason you may have. An accountant will help you maintain financial records within your business and keep track of all financial transactions in your business. At the start of your business, you may need to hire an accountant that will also double in other roles and functions, such as sales or admin assistant.  As your business finances begin to grow, you may need to engage the services of an auditor to help you audit your financial books and records. This will help you understand where you are getting it wrong in managing your business finance. Another reason you should consider engaging an auditor to audit your accounts is that it will help improve your business image in the sight of prospective investors and partners. To bid for certain government contracts, you will be required to show proof of regular audits. So, why wait till that time when you can get started today?

Conclusion 

One of the reasons most business owners don’t start managing their finances from day one is because they do not see beyond the first few years of their business. When you are able to see beyond the first few years of your business, you will begin to put structures in place to help you meet those business dreams and aspirations. Managing your finances is one of such structures.  Featured image:istock
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This article was first published on 25th January 2022

victor-ifegwu-mbonu

Ifegwu-Mbonu Victor is a Personal Growth and Leadership Trainer who provides training and coaching to individuals and organizations.

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