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April 20, 2017

Get a Refresher Course on Economics before Starting a Business

With a decent credit score and a fresh idea, you can become the owner of a business exceedingly quickly. The downside to getting a new business up and running quickly is that you can also make numerous mistakes in quick succession. Even if you haven’t completed your bachelors degree in accounting, you can learn more about how to manage your financial resources instead of winging it.

A lot of business owners are able to write a convincing business plan and even work with business advisors at the start of their journeys, but when they’re left to make vital financial decisions on their own, they don’t know where to go. Make sure that you are able to believe in your own ability to make good financial decisions related to your business by taking a quick refresher course on money management.

Business Planning and Budgeting 101

Everything that you earn from your business and all expenses that you pay for will be part of your business budget. This means that all of your expenses needed to be deducted from your budget so that you can keep track of your finances and avoid running short on cash at the end of the month or quarter. Adjustments can be made as soon as you learn that your current b
usiness budget isn’t working and you will feel better about making purchases when necessary when you follow your business budget closely.

Keeping Your Cash Reserves High

Even if you have a few business loans that you have acquired to get your business started, you shouldn’t include them when calculating your cash reserves. Any money that you have saved to put towards your business can be included, as well as any business grants that have been awarded. Aside from that, your profits and cash reserves will come directly from sales and money earned through business dealings.

Why Paying Business Creditors on Time Is Important

When you pay your mortgage on time, you are rewarded with a higher credit score over time. On the other hand, if you repeatedly pay late or don’t pay at all, your credit rating is going to tumble and you eventually risk losing your home altogether. This also happens when you are dealing with business lines of credit, and your relationship with each business account creditor will impact your ability to grow as a business. If you have learned how to manage your money well as a business owner via an online bachelors of accounting degree, you will have the ability to pull money from various sources so that you can pay your bills even if sales have been slow lately.

If you want to launch a new company and see it flourish over the next few decades, your money management skills have to be great. Being fully financially literate will let you know right away if your business decisions are sound or if you should review what it is that you think you know. Don’t wait until you are already holding the reins of your business to begin learning how to handle money if you want a strong future as a business owner.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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Item Reviewed: Get a Refresher Course on Economics before Starting a Business Rating: 5 Reviewed By: EconMatters