Financials dictate how a business runs now and how it will operate in future as plans for growth are intimately linked to your revenue stream and cash flow. Keeping track of financials can feel overwhelming while also keeping daily operations afloat, managing staff and strategising for the future. Finances can end up taking a back seat so here are some easy to manage tips to help keep you on track.
Learn how to read financial statements so you know everything about your money – where it came from, how many times it’s changed hands, and where it’s at now.
Always keep personal and business finances very separate
Get a business credit card and be strict about only putting business related expenses on it. Another tip, open a savings account for your business and gradually build a fund that could be used for growth or emergencies.
There will be times when things get so busy you’ll put the finances in the “I’ll do that tomorrow” pile. While you shouldn’t run yourself into the ground trying to stay on top of everything all the time, don’t use that excuse too often and let procrastination become a habit. Regular book keeping and knowing what’s coming in and going out is essential to avoiding business blunders. It helps you stay ahead of game, ensuring you know exactly what’s going on with your business at any given time.
Analyse seasonal cash flow
Being able to identify when your business tends to do well versus when there are quiet periods and revenue slows down is vital for both long and short term planning. Not only does it help you strategise activity it also helps you prepare for when growth is slow so you can put plans in place to stay viable during those times.
Seek capital when business is good
Start looking before you need it. To attract investors or get a loan, your financials and cash flow need to be in good health. You’re less likely to get cash when sales are down and/or the market is shrinking.
Do a SWOT analysis often
The old adage “pick your battles” feels appropriate here. Rather than trying to be the best at everything, know your limitations and don’t spend valuable time, resources and cash in areas where growth may not be sustainable. Certainly you should work to improve these areas, but more can be gained by focusing on your core strengths. Knowing what you do well, what’s not your forte and where you can make improvements will change over time so reassess at least once a year, if not more.
Fixed costs have to be covered regardless of whether you’re doing well or not. Where you can save is in the variable costs. Some ideas are to use video conferencing or a free online calling service instead of long distance travel; use cloud-based software; try bartering your services.
Get a life
Make sure your work life isn’t your only life. In the beginning, putting heart and soul into your business to get it going is great; passion counts for a lot. But, if after a fair amount of time, you’re still needing to put in 80-hour-weeks to run your business then something isn’t quite right. Your business should be able to survive without you propping it up all the time. It’s not healthy for you personally and it’s not healthy for your business because if you falter, it will too.
Think quality over quantity when it comes to the time you spend on your business. What are you doing that’s productive and what’s not?
Don’t be afraid to ask
Another adage,“if you don’t ask, you won’t get.” Kiwis aren’t known for haggling but it should be encouraged. Most businesses have wiggle room when it comes to pricing goods and services so don’t be afraid to haggle for a discount from a vendor.
Don’t be afraid to ask for work, especially in slow times. It could be via indirect marketing or direct marketing, simply reaching out to clients and customers to see what’s available.
And don’t be afraid to ask for help! If there’s something you’re in the dark about, find a professional to help shed some light on it. At O’Connell & Co, we have decades’ worth of real world business experience that can help you along the path to success. Get in touch for a chat anytime.