As an entrepreneur, you’ll have to watch every rand that enters and leaves your business – but it shouldn’t mean cutting back on expenses critical to your business’s success. Most small businesses are strapped for cash, which means you need to be as frugal and strategic with your finances as possible.
Knowing what to skimp on and where to splurge is especially important when it comes to your small business’s finances.
Cutting corners on an expert bookkeeper or your record-keeping, for example, is not only likely to land you in hot water with tax authorities, but it might also end up costing you in the long run.
When it comes to managing your small business finances, we suggest prioritising the following five expenses:
1. A solid business plan
Writing up and investing in a business plan may seem like a chore. But it has the potential to clarify what it is you’re planning to do and how you’ll make money. It’s also during this time that you’re able to define where you want to spend your money as you build out a store, restaurant, or office.
Business plans don’t have to cost a fortune, but investing money into relevant market, branding, and corporate culture research can help you clarify your target market and business viability.
2. A bookkeeper with expert tax knowledge
There’s no shortage of excellent finance management apps that claim to do what a bookkeeper can. But regardless of your software’s feature set, you’ll want to ensure that you get only the best advice and expertise when it comes to managing your books and filing for taxes. In particular, invest in a bookkeeper who specialises in small businesses, or better yet, in your specific industry. Doing so will help you streamline your operation and reduce the risk of landing up on the wrong side of the taxman.
3. Scaleable accounting software
As important as it is to hire a pro to deal with your taxes, investing in quality, scalable accounting software is a pretty wise decision early on. Find a solution that starts off as relatively inexpensive and allows you to expand functionality as your business grows. Your bookkeeper and tax expert are only as good as your record-keeping, and making a calculated investment into a reputable tool to manage this aspect of your business will save you time and money in the long run.
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4. Point of sales systems
Any small business owner needs a secure and efficient way to process payments from their customers. You’ll need to accept all major cards, and features like wireless payments and digital receipts are great value-adds for customers supporting your business. A good point of sales system will also provide you with invaluable data and integrate with industry-standard software to keep your business ahead of the pack.
5. Yourself and your staff
Figuring out how much to pay yourself, particularly when your business is in its infancy, is far more complicated than it seems. Equally, it’s tempting to over reward staff. Good morale among staff and founders is critical in gritty start-ups, and skimping on salaries and benefits will undermine this. This, unfortunately, means that founders may at times have to cut back on their wages – but once your business starts showing a good profit, it’s important to reward all role-players appropriately – yourself included.
Managing your small business’s finances is complex, but knowing what to splurge on and what to skimp on can make your life easier and give your business the best chance of success.
Want to simplify your business’s financial management? Sign up with Yoco today and get access to our all-powerful Portal: our free, smart software that enables you to manage your day-to-day sales, inventory, and staff.