Compendium Nancial is an organization comprised of accountants and business analysts, with a goal to help entrepreneurs create extremely successful businesses. As president of Compendium Nancial Inc., Abbas Hyder is no stranger to managing businesses. Hyder, a member of the Wave Pro Network, has extensive experience helping businesses through accounting and finance struggles. We had the chance to chat with him and get his advice. Here are his top 5 entrepreneurial tips for small business owners.
1. Budget your spending. Hyder says the best way to run your small business is to know how much money you need to make in order to break even and how much you have to spend to run your business on a daily basis. Separate your business budget into 4 categories:
i) prospective income
ii) fixed expenses
iii) variable expenses
The key to financial discipline is realistic balancing of needs versus wants.
2. Don’t Spend. Invest. Spend your hard-earned money on things that will reap long-term benefits. Every expense has two faces: current benefits and long-term benefits. Businesses that spend on a long-term investment nature reap its benefits much longer. But remember to balance the cost versus the benefit. If your expense doesn’t directly help you in increasing your business or quality of your work, don’t spend on it.
3. Maintain Records. Keep all receipts, organized, in a safe place where you will be able to find them when you need them. The top four reasons for lost records are:
i) They simply weren’t kept.
ii) They were kept but are so disorganized you can’t make sense of them.
iii) They were kept very organized but got washed or destroyed.
iv) They were kept safely and organized in a place but you can’t find them. Spend a few minutes a day to organize your documents and avoid losing anything.
WAVE TIP: Download Wave’s Receipts app to quickly and easily upload your receipts and they’ll flow seamlessly into your accounting when you use Wave. The original image of your receipt is always available so you can find it when you need it.
4. Separate your personal and business bank accounts. It’s easy to lose track of your cash reserves and keep funding your business expenses from your personal account. You work so hard on your business, only to find out at the end of the month that you don’t have money left to pay for your living expenses. To avoid this, pay your business expenses from a dedicated-for-business credit card with a fixed credit limit. This gives you the flexibility and control to plan your cash in-flows in order to meet your cash-outflows.
WAVE TIP: Inside Wave, we have apps for both business and personal money management. This way you can track both finances, without any overlap.
5.Be lean. A business has two types of costs – fixed costs and variable costs. Fixed costs are like body fat. You have to bear the weight whether you make money or not. Instead of buying expensive, proprietary software, try working with free and open source software. Also, try getting a free online phone number forwarded to your cell phone, or try Skype meetings instead of travelling long distance. Maybe try even bartering for much-needed services with professionals (for example, help an accountant with their marketing material in exchange for a free tax return, etc.). Be lean without diminishing customer satisfaction.