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5 Highly Effective Tips to Manage Your Business Finances

A business can fail for a variety of reasons, but money-related issues are one of the main concerns. According to Home Care Coach and business owner, Michele Ellis-Williams, without an effective system for managing your business finances, some unexpected things can happen and end up costing you money in the long run.
“If debts, profits, and expenses are not managed accurately, a business is likely to sink even before it grows,” says Mrs. Ellis-Williams, also known as Coach Michele.
Below, this highly renowned Home Care Coach gives some tips that can help you to manage your business finances.
1. Create a long-term financial plan
“The first step any business owner looking to manage his/her finances accurately should take is to develop a long-term plan to keep track of the money coming in and going out. This plan should involve knowing what the business expenses are and how they will be covered,” explains Coach Michele. “As a business owner, this information will enable you to prioritize your spending and will keep you from investing a lot of money on irrelevant projects that may not give you the ROI you need. For example, you may decide to allocate 20% of revenue to improving products, 30% to growing your business, and 50% to cover expenses. A professional accountant or bookkeeper should be able to help you put a plan together and to make any changes if and when necessary.”
2. Get insurance cover
“Starting any kind of business is inherently risky. More than 50% of startups are failing within the first five years. It is not a question of whether you’ll face setbacks. It is a question of how and when. The system may fail. Loyal customers may leave you. Partners may betray you, and so forth,” continues Mrs. Ellis-Williams. “For such reasons, a business insurance plan is a must-have. Most insurance policies will cover lawsuits, natural disasters, employees’ compensation, and the death of a business partner.”
3. Set clear targets
“Setting clear financial goals for the future, which should relate to both the short and long-term, is also a very important way to manage business finances effectively. Without setting goals or targets, it can be hard to know if your business is doing well.,” continues Coach Michele. “When setting targets, it’s of utmost importance to set both a best case and worst case scenario. This will offer a full picture of how successful or unsuccessful your business is. It will also give you more time to take appropriate action if the main target isn’t achieved.”
4. Invest in accounting software
“A common practice among many entrepreneurs is managing their business finances through basic spreadsheets. What these entrepreneurs don’t know is that these spreadsheets may not have been designed to support their accounting processes, “says Coach Michele. “You will need a good accounting app in place, which will significantly speed up the ability to manage the accounts. These accounting applications have a wide range of features. They can help with running reports on key metrics, staying in touch with daily expenses, and tracking your financial picture. The more advanced applications can help to prepare tax forms.”
5. Take advice
“In conclusion, learning to embrace advice from entrepreneurs who have been there before and overcame all kinds of financial mountains is something worth considering.”

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