With the spring weather just around the corner (well here’s to hoping…) it’s a good time to not only wipe away the cobwebs from around the house but to also have a look into your business and see how financially fit it is. For some this means going back to see if you’re on track, compared to new financial year goals and plans that you would have set prior to 30 June.
We often set resolutions that quickly fade with the stresses of business life. Here are a few tips to help you move forward, make those goals a reality and end the 2016-17 financial year on a good note!
1. Let’s Talk
Make the time to talk about money. Don’t wait for over spending, overdrafts or a financial crisis. Get clear on your needs and wants. Many small business owners think they can do it all on their own, while you may think you are saving money you can actually hinder your business if finance is not your thing. Talk to your accountant about the information you must keep and the things you need to know.
2. Manage Your Information
Get organised! The quality of your information will determine the success of your business. Look into a good cloud accounting system such as Xero and automate as much as you can. You will be able to capture, store and keep track of invoices and receipts, together with the convenience of accessing anything, anywhere at any time including financial reports you need to manage, in order to determine the health of your business.
3. Create a Budget
Establish your income streams, determine fixed costs and include expenses. You may find the earnings left over after paying basic business expenses are being foolishly spent. Is your income increasing, stagnate or decreasing? The benefit of having a good accounting system like Xero is that you can include a budget and compare to actual monthly and end of year reports. Make sure to set aside time each month to evaluate your progress, adjust and make improvements if required.
4. Pay off Debt
Prioritise the process you pay off your debts. For loans, credit cards and other types of debt, arrange the debts according to the interest rate you are paying on those debts. Plan on making additional payments even a little over the minimum monthly payment, this can make a huge difference in the long term. Then start paying down the loans and debts with the highest interest rate first.
5. Set Your Business Financial Goals
As Benjamin Franklin said “If you fail to plan, you are planning to fail”. Whether your financial goals are small or big it is worth setting them so that they are concrete and you have something to work towards. Some are afraid to set BIG financial goals for fear of failure or because you don’t think you’re capable of achieving them. Start by breaking down those bigger goals into segments so that they appear more achievable and don’t become so intimidating. Build a time frame around your financial goals and know what you need to do. Understand the mechanics behind your financial goals i.e. hours, number of projects etc. then move backward to determine timing.
Most small business owners aren’t particularly good at accounting or finance but to be successful you need to know your critical success factors and key numbers in order to make regular financial evaluation. Don’t be afraid to ask for help! We can help you manage your finances, develop budgets and put in place processes, to help eliminate debt in order to maintain good financial behaviours.
Let’s start getting your business financially fit!