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Financial Habits Business Owners Should Have

  • Highlights

  • Review your finances every month

  • Keep regular accounts for immediate information

  • Budget accurately to meet various expenses

  • Hire an expert for tax planning

When you have clarity on financial goals and practices, you can ensure that your business stays competitive and grows. Here are seven financial habits that will propel your firm into the next phase of growth.

Review your finances every month

1) There’s nothing quite as important as reviewing your finances. Make sure you record and keep track of important elements such as expenses, payments received and payments due.
2) Build a financial record by saving all bills, receipts, invoices and bank statements. Make things easier for yourself by computerising everything or using accounting software. If you’re drawing up a financial plan, the latter will list your transactions and serve as a solid starting point.

3) As a thumb rule, save records in a chronological order, categorised by month and year. At any point, you should have a clear idea of what your revenue is, the collection due and the status of your debts. This will help you identify any gaps in working capital so you can arrange for needed funds in advance. It will also help you assess places where you or your staff can do better, such as shortening the billing timeline.

Set a budget and stick to it

1) To achieve your firm’s financial goals, it is important that you work according to a budget. A budget helps you restrict your expenses once you define a limit. It also highlights what your revenue targets should be for steady growth.
2) Adhering to this budget is as important as making it. It gives your business venture the upper hand by ensuring that financial insights back all decisions. Typical examples of what needs to be budgeted are staff salaries, office or factory rent, equipment lease, raw material or inventory purchases, interest on any business debt, any capital gains, utilities like phone, internet, water or electricity, non-production costs such as marketing and administrative costs and office supplies.
3) Your business may also benefit from creating sub categories within the budget, for marketing, administration and production. You can then amend the budget month by month, see where you are spending the most, how to control these costs, and when to take a business loan to offset these costs.

Hire an expert for tax planning

1) According to your business type and structure, understand what your tax liabilities are. Hire an expert to help you understand the various documents you need to submit, as well as GST deadlines and payments. Then, work backwards to account for this and set aside the required funds at the earliest.
2) Work alongside your chartered accountant to understand the tax breaks that your business is eligible for and how you can apply for it.
3) Record every invoice which has TDS, so you can claim deductions correctly. This help is especially important when your business is in its nascent stages, as it takes time to understand corporate finances unless you have prior experience.

How To Get Small Business Finance From Bajaj Finserv

Dos and Don’ts when applying for a Business Loan

Business loans from Bajaj Finserv are designed specially to help growing businesses meet their financial requirements. Easy to apply for and hassle-free to avail, these loans come with several unique benefits that make them the ideal mode of business finance for small and medium sized enterprises. However, when applying for a business loan, there are certain dos and don’ts that you should keep in mind, in order to ensure that your application is processed smoothly. Here, we tell you what they are.

Dos and Don’ts when applying for a Business Loan

Be smart about debt

1) Business debt helps you build your firm’s credit history, and finance expenses like equipment purchase or working capital. However, you need to be prudent and focused about taking and repaying it.
2) Availing too much debt over a short period can leave you in a bind. If you have many credit cards that you use for business and personal use, your payments can escalate without you realising it. Reduce credit card expenditure and avoid borrowing a loan while you pay off credit card debt.

3) While debt in small doses gives your business a boost, you must be on top of the repayment schedule at all times. Moreover, make efforts to steadily lower the principal amount. This way you will be able to make the most of business loans without letting them drain your finances.

Delegate finances like you delegate tasks

Apart from delegating decision-making to qualified heads of departments, you should also make it a point to delegate your finances. This does not mean that you leave everything to your accountant or tax consultant. As a business owner you need to keep track of company finances yourself, no matter who else is helping you with it. What financial delegation means is that you decide how much you can spend on various tasks, and where you need to hold back. For example, if you are paying a middle man to source certain specialised inventory for you, that is a cost that is worth bearing, but overpaying office rent isn’t. Study your balance sheets to see where you are spending the most and where you can afford to do so.

Keep your growth finance calculation ready

1) The opportunity for growth often presents itself suddenly. You only have a limited timeframe to make your decision. This is why it pays to have financial calculations about your growth within easy reach. Seeing where you can use debt, equity and hybrid financing techniques comprises growth finance, and is very useful to keep ready in advance.
2) Apart from your growth matrix, ensuring that you have a financial plan will help you detail how you will achieve your goals and what the projected monetary gains will be.
3) You should have the paperwork ready for how much business finance you will need to raise from internal and external sources to finance business expansion. You can do this by reviewing profit and loss statements and balance sheets of previous years.

Developing these habits will help your business grow steadily and achieve its financial targets.

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