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      Money Management For Small Business Owners—What You Need To Know
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      For Your Small Business Melissa Houston May 22, 2025

      Money Management For Small Business Owners — What You Need To Know

      If you don’t manage your business finances, your business will manage you. And not in a good way. Good money management for small business owners is critical for your business to thrive. Most businesses don’t fail because they lack passion or talent. Failure is often in running out of money. In fact, more than 80 percent of businesses fail due to financial mismanagement.

      Money management isn’t about just tracking receipts or filing taxes. Good money management means you are making intentional, and profitable, business decisions that support the longevity of your business. These decisions support your cash flow, financial growth, and keep your business doors open.

      Whether you have just started your business or you’ve been in business for years, it’s never too late to invest time in money management.

      Why Money Management Matters

      Good money management is the foundation to every successful business. If the cash isn’t flowing in, you are running your business on fumes. Cash flow is the lifeblood of your business, and when it’s managed well, you can pay your team, invest in business growth, and sleep well at night. And when money is not managed well, your business can crash and burn.

      You need to understand the difference between profit and cash flow. While profit is critical for business ownership, it doesn’t mean money in the bank. You can be profitable on paper (in your income statement), but still be cash challenged if your clients aren’t paying on time or other issues are happening in your business.

      Poor financial habits can quietly destroy your business. Knowing your numbers will give you a clear handle on your money management. Without clear money management, you are likely to spiral into debt, burn out, or make panic-induced decisions that harm your business.

      Key Areas of Money Management to Focus on

      1. Cash flow forecasting

      Tracking cash flow weekly helps you stay ahead of your cash balances and identify any shortfalls, plan for upcoming expenses, and avoid the stress of being caught off guard. Red flags to watch include consistently running out of cash before payday, relying on credit to cover expenses, and having no idea when invoices are due.

      2. Budgeting and forecasting

      A real budget is based on real numbers, not hope. You need a budget to show you what you can afford, when to scale back, and where to invest your profit. When paired with forecasting you can plan for slow seasons without scrambling.

      3. Paying yourself

      Skipping your paycheck may feel necessary at times, but it’s a fast track to burnout and resentment. Set your owner’s pay based on a realistic financial need, not on what is left over at the end of the month.

      4. Managing business debt

      When used strategically, some debt can be good. But bad debt like high interest loans and credit cards can kill your cash flow. To stay in control, avoid stacking debt and stay on top of your repayment terms.

      5. Tax planning and compliance

      To stay on top of your taxes you need to treat your taxes like a monthly expense. Set aside a portion of your profit every month to ensure that you are not surprised at tax time.

      The bottom line is that good money management in your business will offer you freedom, financial security, and long-term wealth. When you understand your numbers and make informed financial decisions, you stop operating from fear and lead with financial power. Don’t wait for a financial crisis to start good money management habits.

      Connect with an Old National Small Business Banker for more insights to help your business grow.

      This article was written by Melissa Houston from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

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