Finance plays a huge and very important role in any business. Without a proper financial management, a business is as good as doomed. Finance is what holds the business together and keeps the various operations functioning. If there is proper financial assistance, a business can have a proper marketing strategy, a full-fledged sales force and a strong operations line up to keep your business function smoothly.
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Managing finance is very important as every business owner needs to know where his money is being spent, on what, in how much quantity and what the return on investment is. Only activities with a good ROI in the future are focused upon and all loss-making ventures need to be stopped.
Here are few financial tips that will go a long way to help any business to establish itself and show a healthy growth in business:
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Have a Strong Legal Structure
If you’re working as a corporate entity or as a sole proprietorship, you need to have a proper financial planning about how you want the business to run, however, it’s always safer to run as a legal entity as it gives you legal recognition and protection. If you’re a sole proprietor you might always face the fear of litigations and being sued. Once you’re a corporate entity you’ll have your credit rating and will be able to have a better tax structure and if you have multiple heads funding the business, it’ll work best if it is all jotted down on paper as to know who owns what, who is in charge of what and whether the taxes need to be paid at an individual or corporate level.
The way your business is structured dictates how you pay the taxes and how soon your earnings will start getting taxed. If you’re a corporate entity you need to start paying taxes from the time you make your first earnings and you should adhere not to have any legal complications or issues with the Income Tax Department as penalties are high.
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Find out Hidden Costs
It’s very important to have the idea about the expenses that are piling up both- in front of you and which you cannot see immediately. You need to see your legal activities and the cost of that, your capital for future expansion and also the salary you’d be paying out to your employees. Once the numbers are in front of you, you can easily make a proper financial plan as to where the finances will come from and how you can go about arranging them!
Know your Financial Standing
Know the market and your competitors thoroughly. Do a complete SWOT analysis of your business and find out where your opportunities are and what your competitors are missing out on. Try to get a first mover’s advantage into the market with something new to carve out a niche for yourself. Know when is the right time to float stocks if you plan to go public and ascertain yourself in the market place which will further strengthen your financial position.
Engage with Financial Softwares
Use finance management softwares to track your finances effectively and get an accurate picture about your profit, loss and income statements. You can better manage your balance sheet by knowing the worth of your assets against your liabilities. Go for cloud based management softwares as well as good ERP software that give you an overall picture of your organisation’s internal working and exactly where the financial department stands. Don’t be afraid to take professional help.
If a firm or company has a strong financial backing, it can easily surf the tides of economic uncertainty and manage to thrive even in times of recession. Make sure that your finance becomes your asset as it’ll set up a good background for the rest of the business as well.