Small Business

7 Tested Tips for Better Money Management

Financing and cash flow tips from the women of the PROFIT/Chatelaine W100

Written by PROFIT Staff

Most entrepreneurs go into business to make money, not manage it. But securing financing, managing cash flow and controlling costs are unavoidable tasks for business owners whether they’re starting their first venture or running a multi-million dollar firm.

The women on the 2015 PROFIT/Chatelaine W100 Ranking of Canada’s Top Female Entrepreneurs run some of the country’s most successful businesses. Smart money management is just one of the skills that have helped these inspiring businesswomen build their profitable, growing companies.

Here are seven tested tips covering financing, cash flow, cost-cutting and financial planning from Canada’s Top Female Entrepreneurs.

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“Every year when we do our budget, we calculate three months worth of operating expenses and set aside this amount of money in a high interest savings account as our cash cushion. We update this amount yearly. The cash cushion is there in the event we run short on cashflow in our main chequing account. We use it as if it were a line of credit, topping it back up when cashflow is back on track.”
—Sarah English (No. 79), Usability Matters, Toronto

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“Savings provide the opportunity to take on professional risks. People who are weighed down by excessive financial obligations cannot take advantage of opportunities and thus cannot take on risk to the same degree as someone who has savings.”
—Kim Shannon (No. 37), Sionna Investment Managers, Toronto

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Establish a credit history. Yes, this means getting a loan or using a line of credit even when you don’t need it. But when you want to do something, you want credit to be available to you.”
—Shantal Feltham (No. 23), Sitris Research, London, Ont.

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“Consider the long term impact of any financial arrangement. Better terms on fees (and therefore slightly higher costs) may turn around and bite you a few years out, so run the numbers and consider the impact of marked changes.”
—Ann Kaplan (No. 14), iFinance Canada, Toronto

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“Switching to paying suppliers with credit cards has allowed us to pay for many airplane tickets and hotel stays with points. We travel extensively for trade shows and customer meetings and any cost reduction immediately impacts our bottom line.”
—Marla Kott (No. 42), Imprint Plus (Illen Products), Richmond, B.C.

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“Our business is self-financed, which mitigates the risk substantially and is something I’d recommend to others launching a start-up. We’ve grown into a multi-million dollar business through an initial investment of just $2,375 each, which proves that success doesn’t rely on massive investments or loans. We reinvest cash generated by the business back into the business and this has facilitated growth without added debt.”
—Julie Cole (No. 28), Mabel’s Labels, Hamilton, Ont.

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“We merged with another design company, Soapbox Design. Figuring out how to value the respective offerings was challenging but we came up with a solution that worked.”
—Julie Mitchell (No. 96), Parcel Design, Toronto

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MORE ESSENTIAL ADVICE FROM THE PROFIT W100:

How do you manage your money? Share your strategies and tips using the comments section below.

Originally appeared on PROFITguide.com
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