Proper financial management is key if you want to run your business successfully. It ensures you have working capital on hand to cover payroll and expenses. Additionally, the right financial management strategies can ultimately help your business save money. Ideally, financial management should be a year round endeavor, and here are some tips to help you make that happen:
Schedule periodic financial meetings
To keep on top of your finances and your financial goals, you should set regular finance meetings. Depending on the size of your business, you may want financial meetings where you personally go over the finances alone. However, in other cases, you may want regular meetings with your accountant or financial advisory team. These meetings should happen quarterly at a minimum, but monthly is preferable in most cases.
Always know what’s happening next
You cannot tell the future, but you can make quality estimates that can help guide you. Ideally, you should create cash flow projections for your company. These statements simply take the revenue you expect to earn and your outgoing expenses. Then, they help you see how much cash you are likely to have on hand at any point in the upcoming period. You can make these projections for a year, a month or any other time period, and that help you plan for ebbs and flows in working capital or cash on hand.
Plan for slow times
In addition to estimating your potential cash flow, use last year’s numbers to help you anticipate times when revenue is likely to be slow. Then, create specific plans just for those time periods. For example, if you slow down on sales in the off season, you may want to hold a super sale the last day of the busy season to boost revenue. In other cases, you may want to diversify your product line or your selling platform to deal with ebbs in revenue. For example, if you own an ice cream truck, put an espresso machine in there and sell lattes during the winter. Similarly, if you have a shop in a tourist town, open up an ecommerce site for the slow season. Alternatively, have savings or a flexible line of credit in reserve.
Continue your education
If you want to ensure you are handling your finances as well as possible, focus on continuing your financial education. There are a range of financial resources designed for small business owners, and they can help you generate new ideas, learn about effective strategies, and provide you with other financial management tips. To make this a year round practice, consider setting aside a certain time — for example, an hour every Tuesday morning — where you read or learn about new financial resources and money management techniques.
Don’t leave taxes until the last minute
Ensuring you have cash on hand when you need it, is only one aspect of money management. As a small business owner, you also have to make sure that you are on top of your taxes. To that end, you should set aside a portion of profits each week so that you can pay your quarterly taxes easily.
In addition to that, you should utilize tools that make tax time easier. For example, expense tracking apps such as Expensify can help you track your expenses. That speeds up the process at tax time, but it also ensures you don’t overlook an expense and unnecessarily drive up your tax liability. Similarly, accounting software or a simple program such as FreshBooks that allows you to track your revenue can also be helpful for streamlining tax preparation.
Focus on task management
If you find it hard to stay on top on financial management, consider using a task management tool such as Trello or Todolist. With these tools, you can create checklists of what you need to do with your finances, and this helps break big goals into manageable segments. Additionally, you can set reminders so you don’t forget to pay bills and incur late fees.
Track your time
Time is money, and if you are wasting time, you are likely wasting money. To keep tabs on the time you devote to specific projects, consider using a task management app. There are long lists of options available on the market, and they can do anything from simple time tracking to tracking time and expenses based on client.
This allows you to see where you are wasting time as well as identify where your time is a great investment. In addition, these tools prevent you from losing hours and ensure you always know how many billable hours you’ve racked up for your clients.
Managing finances can be one of the most frustrating and sometimes confusing parts of running a company. However, with the right strategies, you can manage your money well, and give yourself more time to focus on your real passions in your company.