Managing business money

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     Managing a small business means managing money. If all your expenses and payments add up to less than income, you can point to a healthy bottom line.

     The money left over after all the bills are paid at the end of the month is money you can use to grow and expand. Look at it as your growth capital. Use it to sock away for a rainy day, or use it to buy new equipment, more products for resale, maybe even add an employee.

     Example: Nancy runs a flower shop. Income exceeds expenses, but it's not enough to fund an expansion she has in mind. With Mother's Day coming, Nancy went to work. She blasted out emails to current and former customers. She took dozens of pictures and posted them on Facebook, LinkedIn, Instagram and other social media. With little expense, Nancy put her flower shop in front of hundreds of eyeballs. Orders began arriving for Mother's Day and Nancy had to hire several part timers to handle the work. With the excess bottom line dollars generated, Nancy added a new line of silk flowers and arrangements. She would expand her flower shop business to include corporate offices, banks, and other organizations looking for revolving flower arrangements for their establishments. Nancy self-funded her expansion.

     Example: Alex runs a home improvements business. Projects typically run $5,000 to $25,000. He requires 1/3 on contract signing, 1/3 when an agreed-upon milestone is reached and the final 1/3 at the completion of the project. His work is almost self-funding. Alex is careful to separate the accounting for each project, and he is very much aware that the bottom line excess, or profit, is in that last payment--not upfront. This money management scheme has allowed Alex to grow confidently--those last payments have funded his addition of new equipment as well as hiring additional workers.

     Example: Judy is a certified Pilates specialist. She used her personal credit cards to get into business--paying for training and equipment. It took many clients, both private and group sessions, to pay off the bills Judy had run up on her credit cards. Using credit cards means borrowing money, and that means paying interest charges--a much higher rate than you might get with a bank loan. Sometimes, it's the only way forward, but do it only with your eyes open. Judy has a long term plan to establish a wellness center offering services from other specialists. It will take months to clear up the credit card bills, but Judy will eventually be able to realize her ultimate business dream.

     In business, you learn to manage your money or you won't survive. But with good management, you can self-fund your growth.

     Managing money in your business takes creativity, ingenuity and a willingness to take risks. Keep your eyes open and your thinking clear.