Three Ways New Business Owners Can Get Their Finances Off to a Good Start

A new business owner has a lot on their mind. Starting a business from scratch is one of the most stressful - but ultimately rewarding - things you can do. Of course, there are plenty of hurdles and road bumps between conceptualization and realization, and even more between realization and success. One aspect of owning a new business that owners often struggle with is managing their business expenses. Here are some ways to make sure you get your financial management off to a good start.

Don’t get into the habit of being loose with your money

Don’t wait until your business is already off the ground before you begin to find ways to cut costs. Don’t wait until their is visible fat before you begin to trim it. As a new business, you have the opportunity to start lean. At the outset, try to limit your number of fixed costs and see what you can make variable. For example, see if you can set up employee pay structures to put more weight on performance-based bonuses or payment that is tied into company success. Rent tools and equipment necessary for your business instead of buying all of it outright.

Think about your office space. Do you need a massive brick-and-mortar? Can much of your work be done through telecommunication? Think about energy costs - electric, air conditioning, etc. Can you go digital from the get-go to eliminate paper costs (which add up fast)? How much travel will you and your employees need to do? Think about the cost of flights, a line item that can quickly add up, and how you can get better deals.

Check here for more areas in which to look for cost-saving practices.

Be timely with your record keeping

Your record keeping - bill, receipts, contracts, invoices, etc. - should be detailed, extensive, and easily-accessible (think digital vs. paper). But most of all, it should be timely. Do not wait to catalog and file anything related to your business. In fact, you should set up a designated time every week to scour your records and make sure everything it up-to-date and complete. Seriously - pencil it in your calendar. This time should be non-negotiable. The little time you lose to it now will wind up saving you hours upon hours of headaches later on.

Think critically and realistically about labor

One of the major ways new business owners find themselves unable to properly manage their expenses is they don’t give enough consideration to labor costs. You may feel like you need to hire a lot of people, when in fact, you can make smart decisions that lower labor costs. For example, hiring two people to do two separate jobs - both at $20/hr - is more expensive than asking a little more from one employee and giving them a raise.

As long as you are honest with them about their pay and position at the company, using interns is a cost-saving mechanism that business have successfully used for years. At the beginning stages of your business, however, you may want to save on labor costs by taking on more responsibility yourself. You don’t want to work yourself to death, obviously, but at least for a while you may need to bear the brunt of all the extra work that needs to be done. It is your baby, after all.

The time to get your expenses in order and under control will never be easier than it is when you’re just beginning. As your business grows and gets more complicated, managing finances will only get tougher. Take this time, when your business is new, to make sure you have everything working as smoothly as possible.