A common issue I’m hearing from Small Business owners is lack of time. However setting up good financial habits and investing your time to manage them can go a long way to protecting the viability of your business.
You don’t need to do this alone, a good bookkeeper and accountant can assist & alleviate some of your time pressures. But remember the financial success of your business is more important to you then anyone else & nobody will know your business better so it is very important to spend time reviewing your financial position so that you can make timely adjustments to ensure you are on track to achieve your personal and business goals.
Number 1 Pay yourself - Many SB owners, especially at the outset, neglect to pay themselves as they believe it's more important to get the business up and running and pay everyone else. However you need to ensure that your personal finances are also taken care of.
Number 2 Invest in growing the business – it is important to set aside money to invest in growth opportunities that will allow your business to thrive and move in a healthy financial direction.
Number 3 Manage your Cash Flow – spend time to monitor your books, set aside time regularly to review cashflows and consider things like: your billing strategy -is it effective and are you being paid in a timely manner. Large expenses - Do you set money aside for large payments instead of needing to find lump sums. For example you may have insurance due at the end of April for $12,000, April is generally a quiet month for the business and you may not have sufficient income to cover this expense.
Instead if you had set aside $1,000 monthly you would have the funds available to pay your bill.
Expenditures vs return is your stock and time priced correctly. I have seen many businesses not factoring in product costs accurately to services provided.
And finally - Plan Ahead. Set your short term, medium term and longer term goals and create a plan to achieve them. A cashflow projection is very important in this stage as it will show you things like: Can the business support the income you require personally? Will you be able to afford future expenses essential to your busines operations like equipment purchases or expansion costs and are your ideas financially viable. Adequate planning will help you to avoid spending too much time or money on an idea that may not be financially beneficial.