Finances are the lifeblood of a small business. You need to manage your money well to keep your business growing.

We’ve got five tips to help you manage your finances:

1. Create a System

Let’s start off with a no-brainer: Track your finances. More specifically, create a system to track your finances. Whether that’s software or a bookkeeper, find a way to track every penny spent. 

• There are lots of software options that can automate much of this process and make it easier. But you still have to set it up and do it. Find the software that works for you.

• Data on income and expenses can be incredibly valuable and help you make decisions, but it requires properly organizing and tagging your expenses. Don’t overdo it and make extra work, but include enough specificity to be helpful (i.e., if your “general expenses” far outstrip other categories, consider breaking that up into smaller groups).

2. Pay Your Taxes

Death and taxes are the only guarantees, so this isanother no-brainer. But you’d be surprised at how many businesses get in trouble by not paying on time. Set aside money for those quarterly estimated payments. If quarterly is too infrequent, make it a monthly expense and set aside some savings to cover taxes.

3. Review Your Finances

With automated tracking software it can be tempting to ignore your finances. But you need to keep an eye on it to avoid surprises. Set aside time every month to review your finances and make sure everything is in order. 

• Manage your cash flow—a U.S. Bank study found that poor cash flow caused 82% of business failures.

• Check and update those automated categorizations.

• Follow up on overdue invoices.

• Review for fraud or suspicious activity.

4. Cash Reserve

While every small business has razor tight margins, it’s important to build up a cash reserve. You’ll need extra funds to help your business weather late invoices, unexpected bills, higher expenses, and rising costs. When the situation is bleak, those cash reserves can give you the extra time to find a solution.

A recent study found that many small businesses are living month to month, and the average small business only has enough cash in the bank to last 27 days.

The standard advice is to have a cash reserve to last three to six months, but that depends wildly on your business (and clearly most businesses aren’t doing that). But every bit helps, so save as much as you can whenever you can.

5. Talk With Other Business Owners

In a Forbes article highlighting expert tips, Khalid Parekh of FAIR Bank points to the high failure rate for small businesses (50%) and recommends connecting with other small business owners to share experiences and avoid risk:

“I believe the best source for learning about risk factors is via discussions with real small business owners whom you trust. Seek them out and ask for some time to ask specific questions directly related to their experience and your challenges. It will be time well spent.” - Khalid Parekh, FAIR Bank

It’s easy to connect with other business owners at Evolve. Take the time to make introductions and help one another out (see our networking tips).

Evolve Workplace can be a part of keeping your office expenses low and improving your cash flow. See our pricing to learn more about coworking options.