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The Best Money Hacks for Small Businesses in 2024
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If you’re a small business owner, you already know how important it is to keep a close eye on your finances. Or, didn’t you?
Whether you’re only just starting or have been at it for a while, tracking and managing your business finances is an important part of your process, especially if you want to see that business grow. And no, you don’t have to wait until your business becomes a ‘big business’ to start putting the right processes for your business finances in place.
Most successful entrepreneurs will tell you about how most businesses make the mistake of ignoring their business finances, and do things like having their personal funds and business funds in the same account, dipping into their business funds to borrow an urgent ‘2k’, and many more things that end up negatively affecting the business down the line. For example, in an exclusive interview with Wunmi Kolawole, the CEO of Shoepify, she hammers on the importance of tracking your finances from the get-go.
Good financial management practices can help you reduce overheads, maximise profits and help your business stand the test of time. The more money hacks you know, the better financial shape you’ll be in.
In preparation for 2024, we’re going to take a look at some of the best money hacks around, to help you stay on top of your finances and ultimately make a ton of money!
Importance of Financial Management for Small Businesses
Financial management is how a business plans, organises, allocates, and controls its financial activities. Financial management aims to keep every department in the business on track to achieving the goals of the organisation while following the overall business plan.
Budgeting, cash flow management, financial reporting, and bookkeeping are all aspects of financial management. These various processes are carried out to maximise profits, track liquidity, manage financial relationships, and make sure businesses are compliant with all relevant legislation.
Good financial management is important in small businesses for several reasons.
Many small businesses, especially new start-ups, will lack the financial resilience of larger enterprises. This means that, with less money in the bank, even small mistakes can be incredibly costly.
Image source: Commerce Institute
In these scenarios, financial management is incredibly important, as it can allow your small business to make well-informed decisions, confident that they’re going to pay off.
By thoroughly analysing revenue streams, expenses, and financial records, you can identify potential areas of investment or places in which
business costs need to be reduced
. This allows you to direct financial resources in a way that will positively impact the entire business.
It helps to mitigate the risks associated with poor decision-making. With proper financial management in place, you can plan further ahead for your business, identifying potential problems down the road. This allows you to take steps towards mitigating them early, reducing their overall impact on the business.
What’s more, good financial management practices can make a small business a more attractive prospect for potential investors. Sometimes, you may want to
, so know this; lenders or potential shareholders are more likely to invest in a business if it can demonstrate it has good control over its finances.
A business that is consistently returning profits, and wisely reinvesting those profits, is more likely to attract investment from outside sources. This makes strong financial management essential for small businesses that are looking to expand in the future.
Pro tip: You can use your Bumpa app to track your business expenses, revenue and profit. With the analytics dashboard, it’s easy to see your income, your sales channels, best-selling products, expenses and more! Download the Bumpa app now to get started.
Best Money Hacks for Small Businesses
Now that you have an understanding of how important financial management is for small businesses, it’s time to run through some of the best money hacks that you can exploit to reduce your overheads, maximise your profits, and generally take control of your finances.
1. Monitor and categorise expenses
If you want to know exactly how much money your business is spending, you need to carefully monitor your expenses. This will allow you to keep a close eye on where money is being spent, where savings can be made, and whether there are any irregularities or errors in your accounts.
Categorising your expenses can help you to keep all this straight. Many businesses will deal with a large number of transactions, so organising them by category will help keep everything searchable. You can split your expenses into categories such as travel, office supplies, utilities, etc.
With a tool like Bumpa, you can monitor and categorise your expenses, giving you full visibility into your financial accounts whenever you need it.
2. Streamline invoicing and payment processes
Streamlining your invoicing and payment processes can help you eliminate a lot of the unnecessary manual tasks associated with financial management. This will save you a lot of valuable time, allowing you to dedicate your energy to more pressing matters.
It will also help reduce the likelihood of making mistakes in your accounting. Automated invoicing and accounting solutions dramatically reduce the risk of human error associated with financial management, giving you peace of mind that your books are accurate.
There are a variety of financial tools and software that can help you achieve this, such as software for accounts payable, or the invoice & receipts feature on Bumpa. These tools will allow you to stay on top of your cash flow, and send out and pay any invoices in a timely, organised manner.
3. Adopt cash flow projection and management strategies
Cash flow problems are one of the top reasons that small businesses fail, so taking steps to maintain healthy cash flow is imperative.
Image source: Zippia
Adopting cash flow projection practices gives small businesses a better idea of the kind of capital they’ll have access to, allowing them to make realistic decisions when it comes to spending and investing. This makes it less likely that you’ll overreach and spend money you don’t have.
Utilising cash flow management strategies helps you to plan carefully how money will come in and out of your business, so you can make sure that you’re not caught short by unexpected bills or unpaid invoices.
Take A Quick Course on Bumpa Business Academy: Introduction to Financial Planning
4. Leverage technology for automation and cost reduction
There are many tools and technologies available that will help you automate various aspects of your business. This assists you in streamlining workflows, saving you time and money when it comes to the processes you’ll be performing every day.
Tools such as order management solutions are a great example of this. This is software that helps you to streamline your order management processes, helping you to save time, improve accuracy, and maximise your profitability.
With order management software, you’ll be able to automatically track your inventory in real-time, helping you to avoid stock-outs and overstock with limited time and effort.
Coupled with the added accuracy to order fulfilment it provides, order management solutions help you to provide an unrivalled experience for your customers, improving customer satisfaction and brand reputation, while also saving you time and money.
5. Develop a debt management plan
Small businesses can accrue debts from several sources, especially when they’re just starting. Bank loans, supplier finance, and credit card debt can all weigh down on small business owners.
If you find yourself in debt, it’s important to take steps to limit the impact it will have on your business as much as possible.
One of these steps can be a debt management plan. This is an agreement between you and your debtors, which lays out the terms on which your debt will be repaid. It will often involve you paying a minimum payment every month, allowing you to clear your debts over time, while still retaining the funds needed to carry on your business.
Having a simple, consistent plan for how your debts will be paid will help you to keep on top of your finances, and enable you to better plan for the future.
6. Take advantage of tax deductions for small businesses
There are a variety of tax deductions available for small businesses, which can provide much-needed relief for new startups. It’s well worth investigating what kinds of expenses can be claimed for in your location, as there could be a variety of tools and equipment that you use every day without thinking about, that you could be claiming tax relief for.
7. Reducing office maintenance costs
If you’ve got an office, chances are you’re already paying out a hefty sum of money in rent and utilities. To reduce your overheads as much as possible, examine your office maintenance costs for any areas in which you could save a bit of money.
For example, consider reducing your cleaning service from daily to weekly. You can ask your employees to empty their bins a couple of times a week and save a good chunk of change in the process.
Look at every aspect of your office setup for any potential savings. Instead of performing reactive maintenance when tools and technologies break down, practise preventative maintenance to stop them from breaking down in the first place. Take advantage of discount packages for the tools you use as well.
8. Keep updated on financial trends
Staying up to date with financial trends will help you to make informed decisions when it comes to financial planning, and give you plenty of warning of any possible bumps in the road you might be heading for as you grow your business.
Remaining alert to financial trends will also help you to maximise your profits, allowing you to reinvest your earnings. It’s a good idea to familiarise yourself with financial publications, especially those relevant to your industry. These provide you with the latest financial news, as well as give you an insight into topics such as budgeting, forecasting, cash flow, and taxation.
There are several ways that small business owners can keep updated on financial trends. Joining a professional association catering to your area of business will put you in contact with other business owners operating in your sector, giving you access to their knowledge and expertise.
Conclusion
Taking control of your finances is vital if you want to see your small business thrive and grow. Keep track of all your expenses, and proactively investigate ways in which you can reduce costs.
Stay up to date with financial trends, and take advantage of tax deductions where possible. If you’ve got debts, build a solid plan for repaying them, and make arrangements with your creditors if possible.
Take advantage of the many tools and technologies that can help you automate your processes, saving you time and money.
Apply these money hacks wherever you can, and watch your business, and your profits, soar!
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