Financial management best practices for small businesses

Did you know that there are more than 203,000 small businesses in the state of Utah? Of those, nearly 60,000 have more than a single employee. As Utah’s premier community bank, we’re proud to offer business banking services for Utah small businesses. Beyond offering loans and business checking services, we also provide thought leadership for small businesses who need assistance properly managing business operations. That’s why we wanted to take a moment in today’s blog post to help small businesses in Utah better manage their finances.

First, small business owners must understand how important education and organization are to ensuring your small business stays viable and healthy. Properly managing your finances ensures stability and makes it less likely that your business will fail for any reason. If you want to manage your company’s finances, you must ensure proper payroll, ensure good business credit, keep your books monitored and always plan.

We get it. Managing small business finances can be a challenge for small business owners. While many small businesses fail, those that succeed do so because of the skills and talents of their ownership. The problem is many times those business owners are not financial experts. They may be good at delivering a particular product or service but managing business finances could be another story. The last thing business owners want, or need is to slip into bad financial habits that harm their business. While services like treasury management can help prevent these bad habits, it is up to business owners to keep their eye on the prize.

Keep Financial Education and Organization at the Top of Your List

The most important step for any small business owner or investor is to stay educated regarding the importance of financial education. When they understand the basic skills needed to run a small business, whether it be accounting tasks or financial statements, they ensure a strong financial foundation and keep themselves from becoming business failure statistics.

It’s important to not get too reliant on boxes full of receipts and bank statements. Consider using something like QuickBooks or other accounting software solutions to ensure you keep your finances in order. Small businesses must ensure they properly track their financial records and information throughout the year.

But it’s about more than just staying educated and organized. You must be able to plan and prepare as well. Because it should be about more than just not failing, it should be about growing and preparing for a prosperous future. Managing your finances and opening business bank accounts help towards that goal, but you need to be ready to invest, as well.

Make Investments in Business Growth and Good Credit

Small business owners must ensure they set money aside and look for opportunities to grow their business. Small business owners must keep an eye on the future as they plan future spending and financial growth. It’s also about attracting the right people. Remember about those 60,000 businesses that have more than one employee? Consider how you want to grow, innovate, attract and retain the right people.

Customers will appreciate the increased level of service. Employees will appreciate that you are investing in the company and their careers. And ultimately you will create more value for your business than if you were just spending all your profits on personal matters. You must keep these factors in mind as you plan for business growth during uncertain times.

It is also important that your business credit remains in good standing. Small businesses keep coming to Utah and you may be looking at commercial business expansion. If you want to make commercial real estate purchases, you’ve got to ensure you maintain good business credit. Do that by quickly paying off your debt funding as soon as you can. If you use business credit cards, do not let them run a balance for more than a few weeks.

Maintain Healthy Financial Habits

Small businesses must ensure they establish and maintain proper internal financial protocols. Even if it is something as simple as setting time aside every day to review and update your financial records. These small steps go a long way to ensuring you maintain the good financial health of your business. Since many small businesses often find themselves strapped for time and money, good internal controls can prevent fraud and theft.

In the end, there will always be business issues that need to be addressed right away. But when it comes to your business finances, you must plan. Look five to 10 years ahead and see what headwinds may be on the horizon. Good financial habits will yield big benefits in the long run, and this is how you will ensure the viability of your company far into the future.

Here at First Utah Bank, we’re proud to offer small businesses in Utah not only business banking services, from checking and savings accounts and loans, but also to provide thought leadership content to help them succeed in a tough marketplace. We’re your Utah-based small business community bank and are proud to support our local community. Learn more by perusing our business banking services.