Keeping track of financials while running a small business often feels like an overwhelming task. While keeping daily operations afloat, managing personnel and creatively strategizing, finances often fall on the wayside. This tends to be the fatal mistake for many small businesses. Here are 5 finance tips to keep you on track.
5 Finance Tips for Small Business Owners
Financials are what dictate the rest of the business, and plans for expansion and growth are inextricably linked to a company's revenue stream and cash flow.
Entrepreneur recently interviewed the founder of LessAccounting, Allan Branch, who shared his 5 financial tips for small business owners to get you back on the right path and on to more success. Below, we discuss some of the salient points of the article and our views.
1) Resist the urge to procrastinate
It sounds so easy to let finances fall behind, doesn't it? After all, you have a million other things to do that need your undivided attention. While that is most certainly true, do not let that become a constant excuse.
Regular bookkeeping is incredibly important, as is checking in with your key accounting team to understand the viability of your business. In most cases, putting off these tasks inevitably leads to business blunders that could have been easily avoided, so get ahead of the curve and ensure you know exactly what is going on with your business and its finances.
2) Analyze your seasonal cash flow
This is absolutely essential for any sort of long-term strategy goals you may have for your business. Understanding your seasonal cash flow and its effects is important for both short-term and long-term measures.
You should be able to identify when your business tends to do well, and when revenue is slow so you are able to prepare accordingly. This is will also help you build a cushion for when growth is slow so that your business is able to float by during those times.
3) Pinpoint your strengths, and use those to grow
Often, businesses fall victim when they try to exceed at everything. Expansion and growth are great, but they need to be sustainable. This means understanding what your limitations are, and what areas your business excels in.
Work to improve your limitations, but build on your core strengths. Use them as a foundation, and allocate resources and revenue accordingly. Instead of wasting money and time into activities that do not directly benefit your business, invest wisely.
Work to develop deep and lasting ties to those services and employees that help your business be as successful as possible rather than constantly looking for the next new thing.
4) Your work life should not be your only life
This might seem counterproductive - after all, if you are not putting your blood, sweat and tears into a business, will it really be successful? The short answer is, yes. While in the beginning, it may seem necessary to put in massive amounts of effort to keep your business profitable, but that should not be a long-term practice.
If after some time, your business still requires that much effort to run, then it means that something is terribly awry with your finances - because if you stop putting in the work, then your business may not survive, and that is not at all the way it should be run.
Not only is sustaining a business practice like that unhealthy from a personal and health standpoint, but it also means that there are deeper problems within the business. Besides, consider the quality of the time you spend rather than quantity as a benchmark for success. You could spend 80 hours a week in your office, but if only half of that is spent doing productive work, then it is time to reconsider how you budget your time.
5) Never be afraid to ask
Whether it is asking for a discount from a vendor, or simply reaching out to clients and customers - do not be afraid to ask for work, especially if finances are tough. Depending on the approach, many appreciate the honesty that comes with just simply asking.
The key is try to stay away from being pushy or demanding, but having a frank conversation and taking things from there. It also shows that you are serious, and committed to working with what you have, and making that relationship better which is appreciated by many.
These are just a few simple financial tips that yield great rewards if adhered to. Try not be scared off from your business and its financial state, instead dive in deep and really analyze your business holistically to understand where improvements are needed and where growth is possible.
For more financial tips and guidance, please do not hesitate to contact us.