Strong financial management is the foundation of every thriving business. While it may seem daunting, especially if you lack a financial background, mastering cash flow and general financial management is vital for your business’s prosperity. As the owner or leader, others expect you to be well-versed in these matters, even if they feel like a foreign language to you. However, rest assured that you are not alone in this journey.
If you have ever been blindsided by an unexpected tax bill, scrambling to find funds to cover it, you understand the importance of staying on top of your finances. To avoid such stressful situations, here are six tips to keep in mind.
1. Don’t delegate full responsibility
While it may be tempting to delegate all financial responsibilities to your accountant or bookkeeper, it is crucial that you remain actively involved. Have regular meetings with your financial professionals and don’t shy away from asking questions. Admitting your lack of understanding shows your commitment to becoming more knowledgeable and engaged.
2. Be courageous and seek help
Recognise that you can’t do it all on your own. There is no shame in seeking help when it comes to financial management. As a small business owner, you wear many hats, and it’s impossible to be an expert in every aspect of your business. Be courageous enough to ask for assistance when needed, whether it’s from a Business Finance Coach, an accountant or bookkeeper. Their expertise can help you navigate financial complexities and steer clear of costly mistakes.
3. Create a budget and stick to it
Creating a realistic budget that accurately reflects your revenue and expenses is essential. A budget serves as a roadmap for your financial decisions and allows you to allocate resources wisely. Regularly monitor your budget and make adjustments as needed to stay on track.
4. Keep track of your cash flow
Cash flow is the lifeblood of your business, and monitoring it closely is critical. Stay ahead of your finances by regularly predicting future cash in and out through cash flow forecasting. By understanding when you may experience cash shortfalls, you can proactively plan and take necessary actions to mitigate any negative impacts, ultimately empowering you to make informed financial decisions for your small business.
5. Plan for emergencies
Even with the most meticulous planning, unexpected emergencies can arise. It’s crucial to have a contingency plan in place to handle equipment failures, natural disasters, or unforeseen market downturns. By preparing for these situations, you can navigate them more effectively and minimise their impact on your business.
6. Regularly seek financial information
Make it a priority to receive accurate and up-to-date financial information at least once a month. At a minimum, this should include:
- Profit and loss account
- Balance sheet
- Cash flow forecast
- Your budget.
These reports will provide you with valuable insights into your business’s financial health and allow you to make informed decisions. Take the time to familiarise yourself with these reports and understand how to interpret them. If you find this challenging, consider joining one of my “Let’s Talk Finance” workshops or “Make friends with your numbers” FREE introductory sessions to gain the necessary knowledge.
As a small business owner, taking control of your finances is crucial for the growth and stability of your venture. While the numbers may feel overwhelming, don’t shy away from your financial responsibilities. Instead, embrace them with confidence and seek the support you need.
Remember, mastering financial management is an ongoing process. Continuously educate yourself on financial best practices through financial literacy workshops or accounting courses, and stay up-to-date with industry trends and changes. By staying proactive and engaged, you’ll position your business for long-term success.
So, start today! Take the necessary steps to become financially savvy and take charge of your business’s financial future. Remember, you are not alone, and there are resources available to assist you along the way. Embrace the opportunities to learn, grow, and make sound financial choices for your small business.
Why not join me at my next FREE 1 hour on-line introductory session “Make friends with your numbers” on Friday 28 July 2023.
