| I'm not an Economics Major! What do I need to | | | | business finance, and the largest reason for business |
| know about Small Business Finance? | | | | failures. Let me explain it this way. |
| No, you don't need to be an economics major, but | | | | Can a profitable business fail? YES, and many do! |
| you do need to understand the basics of small | | | | Cash is KING! |
| business finance and good financial management. And | | | | You must have enough cash coming in to pay your |
| if you are an economics major, Great! You have a big | | | | expenses. In the beginning this will be from your own |
| head start. | | | | pocket or from your small business finance loan or |
| Do you need a bunch of spreadsheets? Not today, | | | | credit facilities. But eventually, and in most cases |
| but as you plan your business and it begins to grow, | | | | sooner rather than later, the start-up funding will run |
| you'll know how to use these! When you're starting | | | | out. You need to be focusing on cash flow from Day |
| out, there are five basics areas where you need to | | | | ZERO, and eventually when the business is running on |
| learn as much as you can: | | | | its own income you can focus more and more on |
| Bookkeeping: | | | | profitability. |
| In very simple terms you need to keep track of the | | | | Purchasing: |
| money that comes in and the money that goes out. | | | | You will need to buy things for your business. In the |
| It may sound a simple, and it might be in the | | | | beginning it's important to focus on how you pay for |
| beginning, but you're not starting this business to run | | | | these items. If you're using your credit card, no |
| for a month. Hopefully you're starting this business to | | | | problem, but watch the finance charges. Try and |
| last for a long time. | | | | keep the outstanding balance on your card down to |
| It's a very good idea to put a smart small business | | | | a minimum. |
| finance accounting system into place from the | | | | If your making most of your purchases online, then |
| beginning, and get it set up to grow with your | | | | find a good payment tool or gateway that you can |
| business. You will find a resource page below with | | | | use to pay for purchases while at the same time |
| some very good basic accounting systems that are | | | | collecting money from your customers. |
| affordable and easy to use for small business finance. | | | | Financial Analysis: |
| Credit and Collections: | | | | Don't worry, this is not a huge issue in the beginning, |
| You need to make sure you get paid for your | | | | because if you're like most new businesses there will |
| product or service. How this happens can vary | | | | be very little to analyze. |
| greatly based on the type of business you run. If | | | | But keep in mind; this will become more and more |
| you're just starting out, you will probably not offer | | | | important as your business begins to grow and you |
| your customers credit terms, more likely it will be | | | | have less and less time to dedicate to finance. You |
| cash on delivery. | | | | will need to again select an accounting package that |
| For this you need a payment tool that your | | | | can grow and expand with your business giving you |
| customers trust (always look at your customer's | | | | easy reports to understand. |
| point of view first) and one that will allow you | | | | In the beginning you really just need the ability to |
| immediate access to your cash. There are many | | | | watch your finances and do short range forecasts of |
| online payment tools and gateways, like PayPal. | | | | your cash flow. Most accounting packages have this |
| One important note, it is an extremely smart idea to | | | | as a basic part of the package, if not; keep looking |
| use a payment tool or gateway that also offers you | | | | for a system that offers this from the beginning. |
| the ability to download transaction details into your | | | | Get the Small Business Finance Basics right, and the |
| accounting package. This saves you loads of time | | | | rest will follow with much greater ease. Ignore the |
| manually entering information into your small business | | | | basics, or do them wrong, and you're asking for |
| finance software package, and has many additional | | | | problems later on that will distract you from your |
| upside advantages. | | | | main function as a business owner which is finding |
| Cash Flow: | | | | and keeping customers! |
| This is where most people have problems with small | | | | |