Learning how to manage business finances probably wasn't the first thing on your to-do list when you started your business. However, your great idea has a much better chance of surviving in the marketplace if you have a few simple business money management principles under your belt.

No matter what stage your business is in, from startup to fully in the swing of things, knowing your way around business finances will help you build a strong financial foundation for your business for years to come.

Establish business banking

If you're using your personal bank account to fund your business, it's time to set up a proper business bank account. Separating your finances will help you simplify your bookkeeping, avoid overspending and paint a clearer picture of where your business stands revenue-wise.

To set up a business bank account, you'll need an employer identification number (EIN) from the IRS. You'll also need to register your business in the state where you operate and produce organization papers when you open your account.

Keep your books in order

Well-kept books create a foundation for better business decisions. As you're considering how to manage business finances, you'll need to decide whether to keep the books yourself or outsource your bookkeeping.

If you choose to keep the books yourself, it can help to work with a bookkeeper to set up your software of choice and review how to log revenue and expenses correctly. You'll also need to regularly make time to ensure your books stay up to date.

If you decide to outsource your bookkeeping, there are several online small business bookkeeping services or local bookkeepers in your area to choose from. Make sure you review costs and the documents you'll need to provide each month ahead of time so the professional you hire can do their job efficiently.

Learn key metrics

An essential principle of business money management is learning the definition of key metrics that will help you assess your financial progress as you grow. Here are some key terms to keep in mind:

• Cash flow: The amount of money that comes into and leaves your business each month. If you bring in more than you send out, you are cash-flow positive (always a plus).
• Break even: When your business generates enough revenue to cover your expenses for the same period (such as a month, quarter or year).
• Expenses: The regular costs of running your business, including things like utilities, shipping costs, packaging, annual licensing and manufacturing costs.
• Gross revenue: The total revenue your business brings in before expenses are deducted.
• Profit: When you subtract expenses from your gross revenue, you're left with your profit.

To help yourself get up to speed, you can sit down with your bookkeeper or CPA to review key metrics and learn how to assess those using your business reports.

Review your reports

Whether you choose to keep bookkeeping in house or outsource the task, you'll need to regularly review some basic financial reports to keep track of opportunities in your business.

• Balance sheet: A snapshot of your business' worth. This report gives a 360-degree view of your business' assets (what you own), liabilities (who you owe) and the net equity in your company.
• Profit and loss (income statement): A snapshot of how much money your business is making or losing. This report shows revenues, expenses, profits and losses during a particular reporting period.
• Cash flow statement: A snapshot of your business' liquidity. This report details how much cash you have on hand to meet your monthly debt obligations. Lenders also use it to determine if you're a reasonable lending risk.

Managing your cash flow and having an understanding of the money coming in, going out and being retained by your business can help identify areas for growth along with opportunities to cut unnecessary expenses.

Establish payroll

To keep business and personal expenses separated even further, it's wise to set up payroll services and pay yourself as an employee. You'll gain the benefit of having income taxes withheld throughout the year as well. You'll also be less tempted to treat your business bank account as a piggy bank when you need a little extra cash. Finding a low-cost payroll provider is only a web search away.

Now you have the basic tools to help you understand how to manage business finances. Knowing where you stand financially is a powerful asset as a business owner and one that will help steer your business in a more profitable direction.