Understand Your Business’s Finances with Better Management
Starting your own business isn’t always easy. If accounting and cash flow management aren’t your forte, then you may struggle to stay on top of your business’s finances. While accounting keeps a track of all finances coming into the business or going out, cash flow management is a critical aspect for start-ups as it enables them to sustain themselves in a competitive landscape. Before you get started on startup business loans in Ventura County, CA, here are a few financial tips to consider.
- Determine the breakeven point
There’s a threshold that businesses need to meet that separates them from staying above water to financially excelling. The first step is to determine the breakeven point of the venture. The best approach towards determining it is to calculate the fixed costs and pair it with the initial investments. Businesses can either opt for the dollar-based method or the unit-based method, depending on the ease of calculation.
- Opt for small and long-term financing
Businesses can rely on smaller lines of credit in order to make purchases on an emergency basis. That said, smaller financial credits can be used to minimize the gap between receivables and payables while keeping a tab on the shortfalls as well. Long-term financing can also be used to purchase equipment or adding a greater chunk of investment into the business.
- Keep cash reserves in place
Every business, no matter the size, industry or location, experiences shortfalls at some point. This is where cash reserves come into play. Every start-up, therefore, must look to keep a significant sum handy in order to combat sudden shortfalls. Ideally, you should build up a three to six month reserve of cash.
- Maintain good records
Your business must keep accurate financial records that later may be audited and assessed. Keeping clear records also helps you to understand profit, losses, taxes, and areas in which you can expand or cut back on. Start out on the right foot by maintaining good records.
At Economic Development Collaborative, we have the team and resources to help your business start and grow. We offer a variety of services that take your business to where it needs to be to succeed. Ready to get started? Contact the Economic Development Collaborative. Conveniently located in Camarillo, California, we’re here to help.[/vc_column_text][/vc_column][/vc_row]