9 Steps For Small Business Finances
Finding Balance in Your Hectic World
The todo list for running a business is long and sometimes finances can fall to the bottom of that list. I see it all the time. As business owners we get so busy doing the work that we don’t have time to run the business. If you don’t make your finances a priority, there’s no way to know if you’re winning. It’s like playing sports without a scoreboard.
So, I came up with 9 things to help you manage your finances easier.
#1 Set Aside Time
First, start by setting aside time for your finances. I ask all of my clients (including myself) to schedule 1 hour a week to focus on the finances for your business. Make it a recurring appointment on your calendar. During this time, categorize expenses, review reports, talk to your bookkeeper, and plan the future. You meticulously track everything other business metric. Spend time to make sure your finances are telling you the right story.
#2 Keep Personal & Business Finances Separate
It’s a hard web to untangle once it is tangled. Set up a separate bank account as soon as you have an EIN for your business. Don’t use business money or credit cards for personal items or personal credit cards for business items. Just don’t! I’ve heard every excuse but regardless it’s so messy. If you’re doing this, stop, today!
#3 Cash Flow - Do business at the speed of your cash flow.
Cash flow management is essential for the day-to-day operations and growth of your business.
Steady Growth - Steady, incremental growth beats getting in over your head.
Debt - Work to stay away from debt for your business.
Weekly - Evaluate your cash flow needs each week.
#4 Know Your Numbers
Every business needs to keep a set of books to record income and expenses. You don’t have to do it yourself. If it’s not what you like to do or you’re not good at it, outsource it. Even if you are outsourcing it, you need to be looking at your numbers each week. Nothing should come as a shock to you!
“If you don’t make your finances a priority, there’s no way to know if you’re winning. It’s like playing sports without a scoreboard.”
#5 Spend Wisely
A $1,000 personal purchase feels different than a $1,000 business expense. It’s easier to spend “business money”, but be careful and look back to make sure you’re spending it in the right places. Don’t buy extra items or big ticket items simply because they are business expenses. If you don’t need the latest and greatest for your business to run effectively, don’t buy it yet.
#6 Make Payments On Time
Pay your bills on time. Pay your taxes on time. Pay your employees on time. Pay your suppliers on time. Paying on time is not just good business etiquette but also essential for maintaining healthy relationships and avoiding penalties. You don’t want people to pay your company late, so don’t do it to others.
#7 Build a Strong Finance Team
Building a good team will take a lot of the stress and work off of your shoulders. First hire a good bookkeeper, without clean books your advisors can’t advise. Next, get a tax advisor on your team to help you throughout the year prepare for taxes. Lastly, consider partnering with an advisor that will help you plan cash flow and forecast.
#8 Insurance
Set up the right insurance policies to protect your business. Ask about:
General Liability
Auto
Workers Comp
Key Man Policy
Short Term Disability
Errors & Omissions
#9 Be Generous
Be generous, not just with money, but with time, kindness, patience, and attentiveness to your customers, your vendors, your employees, and your partners. Foster a culture of generosity and professionalism in your business interactions. Show your appreciation through attentive service, timely communication, and fair business practices. Building strong relationships based on mutual respect contributes to long-term business success.
I’ve found that by following these nine steps, you'll not only manage your small business finances effectively but also reduce risks and pave the way for long-term growth and success. Being proactive about financial management not only boosts how smoothly your business runs day-to-day but also builds a solid foundation for its future.
Know Your Numbers. Grow. Repeat. Book a Consultation Now
