I came across an article today that I really wish I had written. In just a few paragraphs Siu Ling Hui sums up the first steps every new business owner must do to provide a strong financial foundations for their business.
She says in her article, Building a Sound Financial Foundation for Your Internet Business ,
I have seen many young fast growing businesses falling over because they didn’t have sound financial management practices in place. Ironically, it is when rapid business growth happens that the financial cracks emerge.
In her article she recommends three must dos:
1. Hire a good accountant or bookkeeper before you earn your first dollar.
I cannot stress this enough. Too many new business owners make costly mistakes because they just didn’t know. A good accountant will help you through the maze of government regulation and provide advice that will help your business be more profitable. Almost without exception a good accountant will save you money.
2. Separate your business and personal finances.
You must have a separate checking account and separate credit card for business. Doing so is more professional and will give you clarity in your finances. Also, if your business is ever audited, your personal finances will not be included in the audit.
3. Manage cash flow.
Cash is king. Cash is the lifeblood of your business. Without cash or available credit your business cannot function. Good cash flow planning will allow you to plan for the ups and downs in your business and insure that you will be able to sail through the inevitable downturns in your business.
These three simple steps will insure that your business has a strong financial foundation and go a long ways towards insuring the success of your business.