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Small-business owners: Managing your money in a challenging economy


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Updated: 1/25/2013 9:32 am Published: 11/01/2012 12:02 pm


(BPT) - Attention small-business owner: Is managing your business' finances causing you stress?

Sixty percent of small-business owners feel their stress levels are increasing, with more than a third citing managing their money as the primary cause, a recent TD Bank survey found. Money management can be demanding for a small business owner in any economy, let alone during a downturn.

'With economic pressures likely to continue, it's important for small businesses to find ways to both grow sales and effectively manage their money,' says Jay DesMarteau, head of small business and government banking distribution at TD Bank.

Below are three tips to help you manage your money and succeed in this challenging economy.

Update your current business plan

Accurately updating your business plan will give you a clear picture of your business' performance. Are you meeting or exceeding your revenue goals this year? If not, look at what's not working and find ways to drive income. Write down your top priorities to close out 2012, and review them at the end of each week. Doing so will allow you to track your progress and make any necessary modifications heading into 2013.

Make sure your business plan includes an accurate business balance sheet, income statement and cash flow forecast. Having exact information on revenue and expenses, net worth and descriptions of assets and liabilities is crucial.

'Your updated business plan should be the tool you use to measure the ongoing success of your business,' says DesMarteau.

Keep a close eye on cash flow

Having enough working capital to weather the ebbs and flows of cash moving in and out of your business can be the difference between success and failure.

Although stocking up on inventory is convenient, purchasing too much can affect the amount of available cash you need for other areas of your business. This situation can lead to a cash flow problem.

You can improve cash flow by monitoring expenses closely and only making necessary purchases. Look out for problem areas in your payment and receivable cycles, such as paying large bills at the same time or allowing customers to fall behind on their payments.

'Small business-owners should talk to their banker about ways to improve their cash flow,' says DesMarteau. 'For instance, a line of credit can be an effective means to accommodate the ups and downs of your cash flow cycle, and can enable you to purchase inventory in anticipation of future sales.'

With a solid cash flow strategy, you can improve your money management and increase the amount of cash you have to run your business.

Partner with a bank that understands your business

'As a busy small business owner, it's important to find a bank that respects your time and offers convenient ways to bank on your own schedule,' says DesMarteau. 'Banks with extended open hours, 24/7 live customer service and same-day deposit availability can offer you the luxury of managing your money when it's most convenient for you.'

Signing up for a checking account that's the right fit for your business can help ease the stress associated with managing your money. Partner with a bank that offers flexible checking products based on your deposit needs. One checking account doesn't fit all, so take into consideration your average minimum daily balance and monthly transactions.

Having the right checking account will help you get the most out of your money, and with features such as free online banking, you'll have the ability to track it at any time.

Managing your business' finances can be difficult in this economy, but by following these three tips, you can eliminate stress and put your small business on the path to improved money management.


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