How to Manage Small Business Finances: A Checklist You Should Be Using Now


From your bookkeeping to the various aspects of financing, to cash flow forecasts, to

how to secure a loan from a lender, small-business owners need to be informed about

every aspect of the business’s finances. Unless you have an accounting degree, you’re

likely not going to be an expert on each of these facets of small business financing; however

the more you understand about the vital components of your financials, the better off

your company will be. And the greater the chance for success.


The following checklist provides an overview of the main financial aspects any business

owner needs to be at least somewhat knowledgeable about. By consulting an

accountant or business advisor, you may gain even more insight into these items. You

might also consider reading about them in any of the numerous accounting and

business finance books available online via Amazon or also through retail booksellers.

1. Cash flow projections. 

This represents both art and science as far as business finance is concerned. Many small-business owners will make projections regarding cash flow based upon previous experience with revenue and expenses, as well as with prevailing market conditions. However, you may have record years of revenue and yet still fall short if your projections are off. The basic cash flow formula is:

Cash flow = total revenue – total expenses


Keep in mind though that revenue and expenses are moving targets—rarely do they

perfectly sync up. This is precisely why there’s an aspect of art to this as well. You need

to have a pretty precise knowledge of upcoming cash flow, in order to properly monitor

payments when it comes to your marketing budget, inventory, personnel changes, and

so forth.

2. Bookkeeping / accounting. 

If you are able to hire trained professionals to handle

this for you, that is wonderful. But, the more you do know about maintaining accurate

business finance records, the more you’ll have a handle on your company as a whole.

Think about your books as the foundation of a building: it is absolutely necessary in

order to build upward. Numerous businesses fail because of flawed or inaccurate

accounting records.

3. Understand the ratio between marketing and the actual income generated by marketing. 

You want to know how much income is generated from every marketing dollar spent. Otherwise, without this knowledge, your marketing budget is essentially wasted. Track ads, keep logs as far as your sales calls and the results and always be monitoring the revenue generated through the various marketing/advertising channels. This way you can gauge what is working and drop those plans/strategies that are not.

4. Generating viable loan proposals. 

Creating meaningful relationships with lenders and getting the loans you need is a process, make no mistake about it, it is not a one-time event. This requires you to develop comprehensive loan proposals and creating well thought out financial statements. Working with an accountant in this capacity can prove very helpful, especially when setting up those vital proposals—you want to make sure the lender has everything they need to forward your application.

5. Know the different types of credit.

Whether it’s a short term loan or line of credit, you want to familiarize yourself with what is available as far as the spectrum of business finance. Become knowledgeable with all types of loans (secured and unsecured) as this will make your decision much easier in the long run.

6. Understand the nuances of savings and investments, both for your company and personally. 

Once you do turn a profit, you want to be sure to maximize those profits. Checking accounts tend to earn little interest—you may be missing an opportunity to let the bank work for you. Also, ensure that you are managing your private retirement assets wisely. Look into, among other products, stocks, and bonds as well as CDs and money markets.

7. Figure out when to invest profits and when to put them back into the business.

This is absolutely vital to your growth. Here, you may want to work with a skilled money

manager or accountant.

8. Start-up funding.

 During a company’s first 3 to 5 years they need to find ways to

keep things moving. As you do not have a track record yet, you may need to get

creative to get the startups funds needed.

9. Think about payroll. 

How do you pay your employees? Don’t merely write checks

without understanding the process. Consult experts and thus ensure that all aspects of

payroll are secure and streamlined. You also need to be sure that you are in fact

meeting all federal and local tax and insurance requirements, etc. Payroll can actually

be a bit more complex than anticipated. Staying on top of it from the beginning can save

you countless hassles.

10. Develop an overall financial plan so that the money flows seamlessly through proper channels. 

Have a verifiable trail when it comes to every incoming check. Understand the credit system in place and ultimately work with your accountant to create a system that allows any incoming revenue to end up where you need it.


Remember you can always reach out to the nearest lending institution and ask about small business financing, funding, financial plans and any other financial related questions you may have.


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