In the retail sector, working capital determines a business’s overall capacity for growth. To optimize working capital, any business – be it big or small – needs efficient money management. 

The cash flow of a business (especially for a small business such as a kirana store) is critical in measuring its financial health. This is because, if the business spends more than its earning potential, it will soon find it difficult to procure capital to work with. When it comes to small enterprises, a critical aspect of cash flow is to avoid all significant shortages caused by spending too much.

How to manage money, efficiently

Here are 4 crucial things you should be practicing as a small business owner to stay on top of your finances.

1. Make a budget – Most small business entrepreneurs are unable to sustain their business without a properly prepared budget. Forming and following a budget will encourage you to think carefully about how you spend your money.

Once you have determined your starting budget, make regular comparisons between your actual day-to-day figures and your budget assumptions. Your budgets will start to become accurate over time, and you will be able to manage your money more effectively.

2. Keep track of your deadlines – It is important to stay informed of any due obligations, such as loan payments. If you are aligned with your deadlines, you will surely be able to keep enough money in hand to pay off any dues.

Set reminders to stay on top of deadlines and to prevent missing any important due dates.

3. Track your spending – If you don’t keep track of your spending habits, your bills will start to add up; failing to keep track of your spending patterns can also lead to money misuse and overspending.

To simplify the distributor and consumer management system for your business, use a payment solution, such as SwitchPe.

4. Reinvest your money into the business – As a kirana owner, there are two things you should remember about efficient money management: 1) be sure to save a part of your earnings, and 2) use some of your profits to reinvest in your business.

The main principle behind money management strategies is to keep track of your money, use it to build your business, save some for the future, and set an amount aside for emergencies.

Conclusion

Every year, thousands of small businesses across India shut down because of the lack of proper financial planning. If you want to thrive in this highly competitive industry, you should know how to handle your business effectively and establish strong financial health. SwitchPe is India’s fastest-growing, end-to-end platform for Micro-Enterprises. Powered by Aye Finance, the RBI-registered Non-Banking Financial Company, SwitchPe is positioned to become an innovative and powerful tool to bring small businesses into the new age of commerce. To know more, click here.