The most daunting task for many home-based business owners is managing business finances. Poor financial management can wreck any size of business, with Enron being the best-known example. Without a sound financial management plan, even the best selection of home-based businesses has a high risk of failure. Before you do anything else for your business, take the essential steps to managing the money end of your business and you have a far better chance that your business will be a profitable one.
Before you even start your business it is important to make a business plan. This will help you keep track of your goals and see how the business is fairing. Researching all that you need before you start and making sure that your suppliers are reliable, you know the costs of postage and packaging etc will make sure that you don’t undercharge or lose orders because of unreliable wholesalers. This is the time to find out where to source everything you will need. There may be some stores locally that sell clasps, handmade glass beads, clay etc, but make sure that you have back up suppliers in the event that these places run out of stock.
Finding out how to source the best wholesale jewelry can be time consuming and it is best to be done at this early stage as having to find something in the middle of a project can be costly. It the customer has to wait too long they may cancel their order and you are left with materials that may not be used in the future.
Paying overdraft charges is one of the most humiliating and funds-eating part of mismanaging money, but keeping your personal and business funds in a single account raises your risk of accidentally overdrawing on the account. It can be avoided by keeping separate accounts for your business. By separating the accounts, it is easier to control your spending and keep track of your business cash flow. You’ll also have an easier time at tax time because your business taxes are figured and paid separately from your personal income taxes.
Having more than one business account is both highly beneficial and recommended by owners of successful businesses. At the very least, you should open two accounts: one for receiving income and one for paying expenses. Determine a set percentage of your monthly income to be deposited into your expenses account, and specify how much should be set aside for each debt. With these two accounts, you will see from whom your funds are coming in and to whom expenses are being paid, making your accounting jobs easier and less time consuming. Include a set monthly wage for yourself in your business expenses; you work hard for your business and deserve a reasonable wage! Just be certain you don’t give in to the temptation to withdraw more money than your salary for personal use. Although it is your business, it is still a business, and you would fire an employee who stole money from your business!
Manage your business finances as conscientiously as possible. Throughout the year, keep your business funds for business use, and at the end of the year, you may pay yourself a well-earned bonus! If you keep to a strict budget and keep account of every bit of income then it won’t be long before jewelry making is a profitable hobby.