Claiming ignorance is no longer an acceptable excuse for the lack of performance of your business. Business owners need to start taking ownership of their business success or failure and the only way to do so is to truly understand their business finances...
As I engage with new customers and ask about their books and finances, most answer that they are not a numbers person and do not understand accounting. This is obviously the easy answer and always a clear indication that
- They have never had an accounting firm take the time to train and educate them around basic financial management, and/or
- They do not want to take ownership themselves for the performance of their business as it is much easier to claim ignorance as an excuse.
But I am here to tell you that you no longer need to hide behind either of these anymore!
"Know your numbers! It's a fundamental precept of business!" - Bill Gates
If cash flow constraints, over expenditure and the lack of enough time to grow your business sounds familiar, you can make massive headway by following these 5 easy steps.
Think of a budget as the backbone of your finances. Without this basic guide for your day to day and core business expenses, the future of your finances can fall flat.
It enables you to plan your finances, predict future scenarios and to measure what you have spent against what you have planned.
You can now have a clear indication where you go wrong and what you have been doing right.
You plan every other area of your business, why not plan and control the flow of finances in your business?
By using trends and knowledge of customer receipts and supplier payments, you can set up a cash flow forecast.
Having a set plan means that you can be prepared for all unforeseeable expenditure. No more surprises when it comes to taxation and other legal compliances. Stock purchases and project planning will be so much easier.
How often do you engage with the people managing your finances? I am not talking about your bank balances, knowing your financial data is what is important.
We are living in the technological era which enables you to hold your finances in the palm of your hand. It is as easy as opening your mobile device thanks to the wonder of cloud accounting.
You need to know what’s cooking in your books and know when to ask relevant questions. You need to be more involved in your business.
You need to have a game plan!
Discussing data acquired from the budget, cash flows and past trends is crucial. You will have a clear idea when to save for a rainy day or when to stock up inventory and resources needed for the coming peak seasons.
Your finances will be more controlled, you will know what to expect, and give your finance team relevant data to report on.
No more over expenditure and time wasting as you control the outcomes. This requires you to continue learning and understanding what is going on in your business.
As your business keeps growing you will need these tools to ensure that you stay ahead. Being prepared for what’s next can now be easier than ever and you do not have to be a finance guru to be able to do that.
Do not be left in the dark. Take charge of your future and take the leap into understanding your finances and your business.
I would like to encourage you as a small business owner to follow our topics in the coming weeks as we will be showing you how to work on these key areas