Today, Im here to share 10 tips for excellent financial management for small businesses.. Are you ready Lets? Get started Our first tip. Keep your accounting records up to date. Up to date, accounting records are the foundation of excellent financial management, which is why Im touching on this one first. Get your basics right and the rest will follow. With up to date. Records youll always have visibility over performance and how youre tracking against targets., If youre off track, you can quickly change tactics.. For example, updating your records might trigger a realization that youre overspending on your business credit card.. The sooner you correct any over spending the lower the impact on your business. Updating regularly will save you a major headache at tax time. Dont try to locate all your bills! Receipts and invoices right at the end of the year., Get in the habit of updating your records regularly or hire a bookkeeper. Second tip Learn to love. Your financial statements. Financial statements are way more than just documents produced for compliance. Trust me when I say they are one of your most powerful tools to manage your business excellently.. There are 3 key financial statements for you to love your statement of profit and loss. Your balance sheet and your statement of cash flows., Your profit and loss, tells you all about the income you have coming in, and the expenses going out and that all important gap in between your profit. Understanding, the key components of what makes up your profit or loss, Means you understand the levers you need to pull, to increase your profit margin and thats very empowering when it comes to making decisions about improving performance.
. Your balance sheet is a summary of what your business owns your assets. What you owe your liabilities and your equity at a specific point in time., Basically its an important tool that allows you to visualize. If what you own, for example, your cash is sufficient to cover what you owe, for example, your loans amp bills from suppliers.. If things are looking a bit tight, you can start to think about your options and whether you might need some additional funding.. Your Statement of Cash Flows speaks for itself. It shows you how much cash youve spent and earned in a period and the key drivers. As a business owner. You need to be keenly aware of your cash position.. Profit is only useful once you have converted it into cash from your customers, which you can use to fuel your business.. Finally, your investors, bank managers and suppliers are all likely to use your financial statements to understand the health of your business as they need to ensure youre, financially healthy or able to pay back what you owe. Theyre. Also, investing in YOU to run your business well and theyll expect you to understand your business’s financial statements. Too. Tip 3 Leverage, financial management, software. Save yourself time and use one of the many secure and affordable cloud, accounting and financial analysis tools. Available. Theyll give you precious time to focus on growing your business because Theyre really easy to use. Theyre online. So your team can all work concurrently and you can update your books, view your finances, anywhere.
Theyre, automated theyll interface, directly with your bank and save you from manually, transcribing and theyll. Even draft send and chase payment of your invoices.. They make things simple, theyll create your financial statements, for you turn your finances into beautiful charts or help. You build your first budget.. I could go on.. Do yourself a favor and start some free trials. If youre interested in looking at a convenient platform for business owners check out Sleek., It has integration tools to Xero and other accounting tools that can integrate all your finance needs in one place. Tip number 4. Cash is King. Excellent cash management is supremely important to the health and longevity of your business. Running out of cash is the number 1 cause of small business. Failure. Well share a separate video on cash management, but the top tips are 1. Keep a cash reserve aside to cover yourself. If you have unexpected expenditure or a low income, month. 2 Keep a business cash forecast to anticipate any shortfalls and plan for alternative funding like overdrafts or loans. 3 Cash flow is more important than profit.. You might be happy to have made a huge profit on a customer sale, but if your customer isnt due to pay you for 30 days and you need to pay your supplier now, you may not be able to make ends. Meet. A forecast will help and so will ensuring your customers are invoiced and pay on time. Tip number 5 Separate business from personal expenditure.
. You need to know if your business is profitable and cash positive in its own right, and you wont have that visibility. If youre intermingling your personal and business expenditure., Always open a separate business bank account., It will also save you a headache from a tax perspective.. Your personal expenditure is not deductible and will need to be manually. Sifted out., Tip 6 Build a budget which reflects your business goals.. A budget is essentially your business goals expressed as financial targets.. I strongly recommend that your business always has a budget in place.. Preparing a budget might seem burdensome at first but start simple and you can always add more. Tip number 7, Be proactive, not reactive Use forecasts to anticipate and plan for challenges and growth.. While a budget sets out your goals, a forecast tells how youre likely to perform against those goals based on the latest information. Its a volatile world and maintaining a live financial forecast keeps you focused on safeguarding the future success of your business and helps you identify circumstances When you need to course correct, for example, if you lose a key customer. Forecasting is also useful to set out the longer term plan to build a healthy business or to visualize various future scenarios, such as how much you can afford to increase employee salaries. Tip number 8 Routinely scrutinize your expenses and pricing. Profit equals revenue, less expenses., So naturally increasing your revenue or decreasing. Your expenses is going to mean greater profit.
, Scrutinize expenses and ensure you are getting the best value for your money and you arent spending on anything that isnt vital to operating or growing. Your business. Pricing can be your most powerful tool to increase revenue and improve profits.. Ensuring youre not under or over pricing is easier said than done, but keep an eye on what your competitors are doing and dont be afraid to seek feedback from your network on your pricing. Strategy. Tip number 9 Prioritise those activities that will bring in the most money.. As a small business owner, youve got a million things on your mind and Ive just added another 8 items to your list. Laser focus., While its not a hard and fast rule, its a good way to prioritize and to focus on things that will bring in the most cash first. Leverage outsourcing.. For example, understanding your finances is important, but you can affordably outsource the maintenance of your accounting records to a bookkeeper, so you can focus on finding new sales. Leads. Tip number 10 Dont be afraid to ask for help.. You might hate me when I say each and every one of these tips is super important to the management of your business. Thats a lot to get your head around and I absolutely recommend asking for help If youre struggling to wrap your head around your finances. Do some further research watch the other videos on our channel or ask for help from your nerdiest finance friend, an accountant or one of Sleeks finance experts like myself, And there we have it.
Those were 10 great and content loaded tips on how YOU can start to achieve excellent financial management in your small business. Have fun getting started on your financial management journey. I hope you have found this video useful. If you liked this episode, give this video a thumbs up or drop your comments and questions down below Dont forget to subscribe to our channel and stay tuned on future. Episodes of this series.