So now that you've cut costs and increased your profits, what do you do with the money you've earned?
One of the easiest ways in which a business can fail, is with respect to its budget. It is important to create a clear savings and investment plan.
1. List your recurring expenses and open a business checking account at your local bank. Just like you did when cutting costs, it is important to set aside money to cover expenses that occur regularly. As a precaution, determine an appropriate buffer- money for emergency or one time expenses and add this to your recurring expense budget. Set this money aside in your business checking account and keep an eye on how funds flow into and out of this account.
2. Give your employees and more importantly yourself a fixed salary. Your personal account and the business account should not be the same!
3. Open a Business Savings Account. After you've covered salaries and expenses, put the rest of the money into a savings account. Savings accounts provide low risk and often earn interest, increasing the value of your savings. Determine a plan for your savings and decide how much to accumulate and how much to reinvest in your business. This requires developing a clear strategy and often working with a professional can help you determine what works best for you. Email firstname.lastname@example.org for more information on this.
4. Invest: This is not for everyone and it depends on the extent to which you are willing to take on financial risks. Not all investments will ensure you get your money back so proceed with caution. Low risk investments however include treasury bills and mutual funds. A financial adviser can help you determine, which investment opportunity, if any at all, is the best fit for you.
Hope this helps and as always feel free to post questions, comments and suggestions.
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