10 Ways to Manage your Finances as a Business Owner

Managing finances as a business owner in Nigeria can sometimes feel like trying to organise a group of kindergarteners in a line after they’ve had a lot of sugar. It can be A LOT. You have to track money being spent and what it’s spent on, money being made and how frequently, make financial decisions and all the while, still run the marketing and operations for your business. It’s easy to get overwhelmed and be all over the place, and lose track of your finances. It becomes a situation of money dey come, money dey go, but if you no pay attention, you no go know.

See my rhyme there? But fear not, because I've got some tips to help you manage your finances as a business owner in Nigeria and track your financial growth. In this article, we will talk about 10 ways you can do this without any stress.

How to Manage your Finances as a Business Owner in 10 Simple Ways

1. Create a Budget

The very first thing you need to do is to create a monthly budget. This will help you track how much you planned to spend monthly against how much you've actually spent, which will help you make informed financial decisions. For example, if you have an exact amount you want to spend on buying items to sell, you then know how to distribute the amount to cover everything you want to buy for the month. Having you a budget keeps you in track!

2. Monitor Your Business Cash Flow

Business cash flow refers to the movement of money into and out of your business over a period of time. It includes all the money that is coming into the business from sales, investments, and other sources, as well as all the money that is going out of the business to pay for expenses such as rent, salaries, and supplies. Cash flow management is important for your business because it helps ensure that you have the funds necessary to pay bills and expenses, and to make investments in the future. Make sure you track your cash flow diligently!

Pro tip: Monitor your cash flow effortlessly by using the expense feature on Bumpa. Create your expense categories (e.g Rent, Salary, Product Purchase, Miscellaneous e.t.c) in the store settings and then use the expense to record every expense for better monitoring of your finances!

3. Manage Inventory Efficiently

This might not seem like a point that has a direct impact on your finances, but it actually does! Tracking and managing your inventory helps you identify slow moving products or products that aren’t selling at all, which can end up tying all your business money down. Knowing this information will help you take steps to remove them, or reduce the purchase of them. For example, you can run discounts on a slow moving product to sell it off faster, and then have money to re-invest in products that sell faster.

Pro tip: Use your Bumpa app to record and track inventory of all your products and get the right data to know which of your products are selling out faster, and which you might need to stop restocking!

Related: 15 Ideas on how to run sales with Discounts & Coupons

4. Use Technology to Manage Your Finances

We’re no longer in the era where you have to stress your head to calculate the numbers. This is another area where Bumpa comes in perfectly. Bumpa is a great tool for tracking your sales, shopping spend, offline sales, online sales, expenses and even down to how much you’ve given your customers in discount. All of these expenses can be seen and tracked right from your Bumpa app.

Related: Subscribe to a Bumpa 2,500 Starter or 5,000 Pro Plan Subscription & Track Expenses Efficiently.

5. Differentiate Your Business Account from Personal Account

One thing that can disorganise your finances very quickly is not separating your business finances from your personal finances. This separation is important and helps you avoid confusion on how money is being spent. You’re also not going to run the risk of spending money for your business on your personal purchases. By having separate accounts, you can easily track your business expenses, revenue, and profits, making it easier to evaluate your financial health. Also, this makes it simpler to prepare financial statements, pay taxes, and apply for loans.

Related: Is your Business Growing? Here's How to Know!

6. Put Yourself on a Salary

It’s very easy to get carried away by the money your business is making and start spending it on your own personal expenses. One shawarma here, one dress there, and next thing you know, you’ve eaten deep into your business finances. Instead of causing a headache for your business like that, pay yourself a salary. By doing so, you can easily track it as a business expense while still having money for personal expenses. It’s okay to treat yourself to something nice; you deserve it. Just be sure to use your salary for it. This will help your business finances in the long run!

7. Set Financial Goals

Goals are important for every business; it helps you move from one level to a higher one. Otherwise, you cannot actually say your business is growing. So, it is important that you set financial goals for your business monthly, or quarterly. For example, it could be meeting a certain revenue target in 3 months, or reducing expenses to a certain amount in 2 months.

8. Avoid Debt

This is another thing that can cause headaches for your business, and you as a business owner even. When you have too many debts to pay, you won’t be able to focus on anything else and your business and maybe even health will be affected. So avoid taking on too much debt and also debts with high interest rates that may be difficult to repay. Instead, consider applying for grants to sponsor your business.

9. Find Ways to Reduce Overhead Costs

You can also identify ways you can reduce your overhead expenses to save more money. For example, you can switch to energy-saving bulbs to reduce spend on electricity in your store, or look into a cheaper supplier for your products if you’re spending too much. However, make sure that a switch to a new supplier does not affect the quality of your products or service!

10. Build an Emergency Fund

As soon as you can, create a separate emergency fund for your business and set aside some money for emergencies that could arise, such as unexpected expenses or a sudden decrease in revenue. It’s not every single month you might hit your target in sales, so it’ll be nice to have an emergency fund to cushion months like that for you.

Conclusion

Managing finances as a business owner can be overwhelming, but with a tool like Bumpa and knowing what to do, it becomes easier. By following these ten tips listed above, you can manage your finances more effectively and track your financial growth!

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