The aim of any business endeavor is to make profit. In today’s tight competitive market you will hardly realize any profit, unless you manage your finances pretty well. In almost all business lines you may think of, you will find that there is stiff competition such that only your creativity and good financial management will enable your business to survive. So, what is good financial management? Good financial management is;

Knowing Your Income

Weather it is your business or personal expenditure knowing your income enables one to know what is affordable and what is not affordable. Take note of all money coming in be it salary, gift or any other money coming in the business.

Budget

Note all the expenses and prioritize them. It may be a good idea to write down all the expenses of say a particular month, compare with the income of the particular month. In case the expenses exceed the income start eliminating expenses that can wait until you remain with the ones you can meet.

Saving

Make regular consistent saving. In any business environment there is profit and loss, although we do business with the aim of making profit, certain unforeseen circumstances may at one time eat away our profit margin. We need saving which can enable us to continue to operate even in such circumstances. Savings should be a percentage of our income. It should be neither too small nor too big. A very small saving will make it difficult for us to accumulate reasonable fund, while a very big percentage will not be manageable.

Business Plan

A good business plan is like a road map to where you want to reach. Make both short term and long term goals. Short term can be what you aim at achieving within a year or half a year, while long term can be what you aim at achieving in say five or ten years. The two goals should however be harmonized .It is much easier to achieve a goal when you break it down to bits. You divide it say to what you do monthly towards achieving the goal and further to what you do daily towards achieving them.

Credit and Debt Management

You should not have too much money outside the business and likewise it is not a good practice to hold money of those whom you trade with for longer than necessary.

In reality it is not how much you earn from your business that makes you make more profit, rather it is how well you practice financial management that matters. You may be making huge profit at the start of the business, but without good financial management you might soon close down.

Check out Puritan Financial Group for income planning, savings management or other financial services.