6 Financial tips for managing your businesses successfully
The start-up phase of a business is exciting and challenging in equal measures. While the entrepreneur meticulously plans the future framework and strategies of the business, it is often the simple operational roadblocks that handicap the progress of the company. Finance decides the success or failure of the business and managing it efficiently is, therefore, key to the business. But to ensure the financial efficiency of its business, the start-up has to put systems in place to manage all activities that leave a money trail. Let us look at how these internal controls and processes are put into practice.
- Monitoring expenses
Monitoring and controlling expenses is easier with a dedicated and focussed finance team in place. Of course, not all start-ups may see assembling a finance team as a top priority and it is alright if your business is understaffed in the beginning. Try to device standardised processes for expense validation and ensure sufficient scrutiny of expenses. Track your expenditures regularly to identify patterns and avoidable expenses. At the same time, reduce paperwork and bureaucracy of expenses as they often consume a lot of time and effort.
- Reducing overheads
Rent often takes up a significant portion of your overhead bills. Consider the option of shared working space for your office. Alternately, try to negotiate favourable lease terms. Encourage serious practices in the use of facilities and stationeries in office – from switching off lights when not in use to avoiding print outs to the extent possible.
- Complying with taxes
You can never claim success in business if you have not managed to sort the compliance and taxation requirements of your business. You can do so by taking the help of experts or by hiring a qualified professional to take care of in house compliance and taxation matters. For example, your payroll processing agency can take care of your employee-related compliances; your company secretary can handle Registrar of Companies affairs while your auditors can take care of your tax liabilities and income tax compliances.
- Customer Data Management
Customer data can prove to be the lifeblood of a business, mainly if it involves dealing with a large number of customers. It is through this database that you will be able to generate sustainable revenue. Be willing to invest in the procurement and retention of customer data. You have to ensure the privacy of your data and ensure that they are stored securely. You have to periodically ensure the relevance and freshness of the data and consolidate them in a reliable data warehouse.
- Robust accounting
The importance of good finance team arises again when you try to build a robust accounting setup. As a start-up, you have to let your accounting system evolve into a simplified system, complete with a demarcated chart of accounts with ledgers and sub-ledgers in place. There should be a defined process to account for the receipts and payments, payment collections and receipts should be done through a formalised system only.
Sound banking practices ensure that you have a clean and accurate record of receipts and payments. A separate business account will help your business to keep personal and business transactions demarcated and ensure a clear audit trail. Before choosing your bank, identify your expectations from the bank and see if your chosen bank fulfills the same. For example, you may need ease in foreign exchange transactions or prefer a user-friendly online platform. HDFC Bank Current Account products are tailor-made to meet the requirement of businesses whatever be the volume of business, nature of business and banking requirements.
These good business practices equip your business to experience a smooth sailing on the financial front. Apart from these practices, you have to also prepare on a strategic front to taste success as an entrepreneur. It takes more than a brilliant idea to achieve success. The playing field is not level and you will be up against business entities of superior financial clout. Even after you manage the initial angel investment or venture capital fund, you will need strategic planning and an ensemble of expertise to take your business on the growth trajectory.
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