How To Properly Manage Finances In Small Business


You can avoid the legion of small business failures by managing your money right. You remember the Olympia-sized challenges (like expanding your clientele, advertising in a world that despises advertising or searching desperately for more investors) you conquered – or are still fighting.
Almost all business problems revolve around cash flow and financial management. In my journey to get my own small business off the ground, I made “How To Get Rich” my business/financial bible. Why? It’s written by Felix Dennis; co-founder of Dennis Publishing, publisher of Maxim Magazine and Health & Fitness. If you have a few minutes, I’d like to share with you a few money management insights and principles that will make running your business easier.

1. Develop A Framework

Developing a framework plan for your expenditures—similar to a budget, only with high stakes a lot more money on the line—lets you know exactly where your money is going. An example of one spending model you could create for your business would be:

  • Spend 50% of revenue on payroll, employee benefits or supplies
  • Spend 30% of revenue on business expansion or recruiting costs
  • Spend 20% of revenue developing new products or mastering your services

The reason for this, aside from knowing where the cashflow is heading, is simple: forecasting. By knowing where your money is going (and allocating it as circumstances change), you can forecast your budget for the next half-year, full year, next few years, etc.

2. Be Wary Of Credit Cards

The New York Post warns that the Federal Reserve is raising interest rates. If you’ve taken out a dozen credit cards to obtain capital… pay them off immediately. Even if it means using your revenue or annual profits (or even your personal piggy bank) to do so. It’s no secret that certain credit companies are loan sharks with unreasonably high interest rates.

So, it’s obviously worth hours, days or weeks of time and effort comparing credit cards to find ones that won’t stab your wallet later. Or, alternatively, to see if other companies offer more reasonable and realistic credit accounts than you already have.

“Better to labor as a wage slave than as a beast of burden to a loan shark.”

– Felix Dennis

3. Hire An Accountant

Cash is definitely a matter that requires hiring a trustworthy accountant. As Felix Dennis says: “If you have no head for figures, simply employ somebody who does and listen to them carefully. Lord knows, there are enough qualified bean-counters in the world and forecasting cash flow is hardly rocket science.”

He then reveals that—as a multi-millionaire—he needed a senior accountant to explain to him how a balance sheet worked. To his credit, he was too busy making (and spending) money to know how to formally record money movement and resting place. “Cash flow,” he says, “is the heartbeat of your company. Balance sheets are a matter for accountants, banks, and auditors.”


Managing your finances lets you stay in control and ownership of your business. This is because whoever has the most money invested in your business has the control and ownership of your business. Whether you sell products or services, if you largely depend on credit cards, advances or loans you will always be in debt.

Image via Shutterstock

About the Author

Himanshu Agarwal

Himanshu Agarwal graduated with a Major in Marketing. He writes for several publications such as,,, He is the founder of and

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