8 Financial Management Tips for Business Owners
Unless you’re the owner of a financial management company, taking care of your business finances probably isn’t on your list of favorite things to do, and you know what?
That’s completely normal.
You don’t have to love every facet of your business to be a great owner, manager, and entrepreneur. In fact, you’ll probably be MUCH better off after you finally give in and offload those extra tasks onto someone else’s to-do list. Follow these tips and you’ll be able to keep your business afloat in the long-term (without letting your mental health sink).
Fall in love with your budget
That’s right: no half-hearted commitments here. Effective financial management often comes down to discipline and your ability to stay within the lines – which, when you’re a self-confessed #dreamer, can be pretty damn confronting. Once you design a budget that works for you and allows you to keep growing your business at a steady pace, you’ll never want to leave!
Split up your taxes
Everyone LOVES forking out large amounts of money for expenses they weren’t prepared for, right? Of course not – we would all rather be on vacation spending those dollars on cocktails – and a good tax management strategy can help you get there sooner! Think of your taxes like any other large bill you know you’ll eventually need to pay, and put funds aside to cover the cost on a regular basis. That way, you can avoid any sudden urges to run away and start a new life in a distant land.
Kill a few costs
Truth bomb: running a business is EXPENSIVE. There are so many seemingly small costs you need to cover, and they can add up to one big, unpleasant surprise when you finally look at your books. This might be hard to hear, but making more money won’t solve all of your problems, especially if your expenses are still out of control. What you really need is a little inside intel on how to plug your “leaky buckets” and fill up those accounts twice as fast (and you can get it in my Expense Killer Training).
Get familiar with ROIs
In case you’re allergic to acronyms, an ROI (return on investment) is basically a measure of whether the money you invest earns you a profit. Why do you need to know this? Understanding ROIs will give you a more accurate picture of whether or not you should buy in. Every investment is a risk, but there are smart, considered risks, and then there’s the financial equivalent of shark diving without a cage. An ROI will make it easier to tell the difference.
Invest in quality software
Bookkeeping is one of those key financial management practices that so many of us LOVE to put off (like going to the dentist, or making a start on that new diet that’s definitely going to work), but the right software might just change that. Here’s the problem: there are so many different pieces of software on the market that choosing the right one for you can be a challenge in itself. If you’re wrestling with a serious case of indecisiveness, check out our list of the top bookkeeping software options for small businesses.
Invest in growth
No one starts a business in the hope of stagnating a few years down the line, but that’s exactly what can happen if you don’t have a solid plan for growth. Good financial management is all about planning for the future and setting aside funds for growth opportunities that may not even exist yet, so start by doing your research. Think about where you want to end up, how you want to position yourself in the market, and how you’re going to get there. Even if you can’t see a clear path to Ultimate Success right now, you might learn a few things about how others in your market made it happen.
Encourage your clients to pay early
No small business is immune to the perils of Late Payment, but when this becomes a regular occurrence, it can really hurt your cash flow. When you find yourself playing Bad Cop with your clients over and over, it’s time to incentivize a behavior change…and just how do you do that?
By offering a discount, of course! Show those clients who always pay ahead of the due date how much you appreciate them with a small percentage discount on their bill, and before long, the rest will be clambering to make the same saving. Now, that’s good financial management.
Ask for help
Repeat after me: I do not need to do everything on my own. It’s true, but I know as well as any small business owner just how stubbornly independent we can be, so think of this as a friendly reminder to give yourself a break from time to time. You might be surprised at how much more productive you can become (and how much more money you can make) when you do. The next time there’s a job on your list that looks difficult, time-consuming, or just plain nauseating, consider turning it over to someone who specializes in that area and spend your time on the things you’re good at (like running your business) instead.
I know how hard it can be to admit that you need a hand (or an extra brain) to get everything under control. That’s why I’m preparing to launch a brand new bookkeeping service that will help you keep everything under control. Wanna be the first to know when it goes live? Send me a message or subscribe to my mailing list to stay in the loop!
Does your "profit bucket" have holes in it?
If you are anything like most people in our industry...it does.
Find out the number one thing that is causing your money to leak out of your business. You’ll get your answer... PLUS I’ll teach you how to plug your leak and start taking home more money every month.