Running your business might be fun, but not if you don’t stay on top of your finances
One thing I think we can agree on right from the start is that you aren’t in business for fun. You might enjoy what you are doing, sure. In fact, it might be your idea of a dream job. But, ultimately your aim is to make money and be a success. What is certain is that won’t happen unless you exercise prudence in your business finances and make business banking work for you. Here are a few simple tips.
Keep your personal finances and business finances separate.
A sure way to disaster is to mix up your personal finance with those of your business. How can you possibly exercise tight fiscal controls if you allow this to happen? You need a current business banking account and a separate one for your own finances. It is also a good idea to set up a business savings account to try and build up a pool of money you can add to any other working capital you hold.
Don’t allow things to drift, not even for a day.
You have had a bad day, customers just haven’t appeared, and you have sold very little. Maybe the last thing you want is to see the consequences of the day in black and white. It is so easy to turn off the lights, lock the premises and start again tomorrow. Don’t be tempted to do this. Feed the necessary data into your system and work out what you have made or lost. This will help focus you on the challenge of tomorrow and perhaps make you think about what you can do to encourage those customers to buy into what you are selling and make up any deficit.
Goals, Goals, Goals.
If you are trading without a business plan, something’s gone wrong. How can you tell if you are moving in the right direction? Even if you have one, it needs to be iterative. Set short-term goals with milestones along the way. Review these regularly. If you are constantly missing milestones than you aren’t going to hit your goal, so you need to look at what aspects of your business you need to tweak or even completely overhaul in order to do so.
Keep a close eye on costs.
Regularly review what you are paying out. Your business will have fixed costs that you will have to meet no matter how you are doing. But, you can exercise control over variable costs. Do you need that service? Are you paying for a deluxe service when a basic one will serve you just as well? Can you get what you need cheaper? These are questions you should answer regularly. Don’t spend money on what you don’t need.
All the data at your fingertips.
It might be too early in the life of your business to go to the expense of paying an accountant or bookkeeper even though this is always a good investment. Not only will they keep your business finances in great shape, they will provide advice and look after your tax affairs, probably saving you money into the bargain. Your alternative is to buy an accounting software package, there are some great ones around, that once installed with the basic data are easy to manage. Take advantage of the real time information Cloud-based software can offer and whichever method you choose make sure you have the basic building blocks of your businesses financial profile to hand.