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Managing Your Small Business Finances By: Samuel Rosenberg

Every business will need to turn to their financial institution for a loan, either to see you through a difficult financial period, or to provide you with the funds so that you can expand your business and achieve greater results. Unfortunately, small businesses are often unsuccessful at achieving a bank loan at a good rate to benefit their business, so how can you improve your chances of success? To understand how you can become successful, it is better to understand what the banks require. When they are assessing your situation, prepare yourself fully so that you can present an answer to any question that the bank puts to you. After all, the bank will expect you to understand everything about your business, your competition and most importantly your finances in the past, the current, and how you intend to plan for the future. Many small businesses complain that they do not have the ability to access bank loans at good rates because those institutions are looking only at larger businesses who wish to borrow substantial sums of money. In return, the banks will often blame the result of a loan application refusal on the manner that businesses have a lack of proper financial records and often confuse their financial situation when moving money between personal and business accounts. To overcome any of the bank’s initial requirements, it is always better to open a business bank account and keep BusinessFocus July / Aug

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all of your personal financial dealings completely separate. When you are able to identify all of the income and expenses through your business bank account, there will be no confusion with any personal money or accounts. Where you have to use cash in your business, it is more efficient to keep a separate fund of dollars for business use, and keep it clearly away from any of your personal currency that you keep in your pocket. All experts agree that record-keeping is essential. This achievement makes you able to assess your current and future business financial situation. There is a wide range of accounting software that is available either free or from a variety of very cost efficient online websites which allow you to record all of the financial details related to your business. Being able to easily add information about your income and expenses from your computer, mobile phone or tablet can help you stay on top of managing the finances. Managing your record-keeping regularly becomes a much easier task than trying to sort the difficulty once every six months. You can turn to an accountant or bookkeeper to help you manage your finances. Where your business grows sufficiently, you can employ this person, but in the early stages you may need to outsource to one who will work just a few hours when you require.

A key element to the success of your business is to set yourself a plan to draw a regular salary that is the same amount every month of the year until you are able to analyse your finances and see whether you can pay yourself more or less, depending upon the quality of your results. It is better to pay yourself like an employee, rather than use the company’s funds as your own expense account otherwise you will never know how the finances of your business stand. By drawing a salary, you will have planned the amount in advance and be in control of proceedings, whereas the people that use the company bank account like a cash dispensing machine, may find themselves out of business because they do not know what is going on. The key is that you stay in control. ¤

Samuel Rosenberg is the founder and CEO of Axcel Finance Ltd., the leading regional microfinance institution. Share your thoughts and email your questions to srosenberg@axcelfinance.com

St. Lucia Business Focus 82  

Our special feature in this issue is the 10th Anniversary of First Citizens Investment Services Ltd. which has grown into a regional powerho...

St. Lucia Business Focus 82  

Our special feature in this issue is the 10th Anniversary of First Citizens Investment Services Ltd. which has grown into a regional powerho...

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