10 habits that will help you get to grips with your finances.

10_habits_W.jpg

Small-business owners often neglect the financial side of things and struggle with getting outside funding. As strange as it sounds, funding is not always the solution to the problem. Look at the following example: After being retrenched, a budding entrepreneur decided to start a tutoring business but battled to see where she would get the finance to start her business. Her next step wasn’t getting finance from a funder, it was getting her first client and therefore generating income – that’s where the ‘funding’ started. Changing your perspective – by exploring different possibilities, educating yourself about money and spending time on the financial side of your business – can help you find new solutions that keep you and your bank balance positive.

10 habits that will help you get to grips with your finances

  1. Do a reality check; be honest about whether you’re good at managing money or not.
  2. Decide what asset value your business should have in five or ten years, then look at what has helped you get closer to that goal and what hasn’t.
  3. Have a weekly money date with yourself and use this to catch up on your finances, address financial goals and learn more about money.
  4. Measure how much time, effort and money it takes to make one sale; this will tell you whether your pricing is right and if you’re making the profit you think you are.
  5. Draw up a financial statement every year; you’ll never know what’s truly going on in your business and funders won’t take you seriously without it.
  6. Have a plan for fuel and supplier price hikes; these can (and probably will) affect your cashflow.
  7. Come up with other ways to keep cashflow going beyond your invoicing and receiving cycle; this includes things such as asking for deposits and relooking your budget.
  8. Do your taxes and make sure you know what slips to keep and what expenses you can claim for – you could be losing out on tax refunds.
  9. Do your research and take responsibility for your own financial education – use the internet and online courses.
  10. Ask yourself the hard questions (the ‘what if’ scenarios) and answer them truthfully.

Click here to download The Essential Guide for Small-Business Owners

 

Was this article helpful?
0 out of 0 found this helpful
Return to top
20 comments
  • As strange as it sounds money is not always the solution to our problems. That's where we get stuck. Do you agree?
    2
    Comment actions Permalink
  • @SimplyBiz. Agreed. Money is not the route to all the issues although it is a priority to manage efficiently.
    0
    Comment actions Permalink
  • I am a bisque ware manufacturer and recently realized that I am not doing well financially making just bisque ware. I then started making potato pots which I had a mould for already and are easier to make and the profit is better. My finances are still not good but I am seeing the results already.I advertised on Facebook and got enough orders to see me through for a while. I shifted my focus to making finished goods instead of the raw article.
    0
    Comment actions Permalink
  • @DustyNick Thank you for that feedback Dusty. How di the shift transpire for you?
    0
    Comment actions Permalink
  • @SimplyBiz I agree. When the focus is shifted away from making money and more towards adding value through the business then the business operated best.
    0
    Comment actions Permalink
  • @SimplyBiz Money should not be the solution although the entrepreneur should understand the importance of building an ecosystem which incubates the production of good cash flow. One should get all of the advice they can.It’s common for entrepreneurs to rely on only themselves but that’s not a winning strategy.
    0
    Comment actions Permalink
  • @RJohn a constant question that we receive on the site is how do I get funding -which seems as though reliance is being placed on an instant cash injection into the business- how would you respond to similar queries? What ideas can you share to incubate the production of cash flow?
    0
    Comment actions Permalink
  • @Rmichael what tips could you provide tobusiness owners on shifting their mindset?
    0
    Comment actions Permalink
  • Money can sometimes be an issue if you do not have it to start or lets say invest in your own company i say this because investors also want you to have something that they can hold you agaisnt when you want to them to invest in your company something like a property so that in case you can not pay back their money they will take it therefore this makes it a financial problem because if you cannot afford to have your own property then you can not get investors and to tell the truth when you are just investing in your own company it takes time for your company to grow because you have to save the little you have in order to achieve a certain goal in your business or buy materials and sometimes you cannot even afford to get that thing that you want. Although you have to get clients to make money in your company through profits how will you get clients and more clients if you do not have all the required equipment to serve your clients and they realise that you can not serve them well they you lose your customers because you can not afford to get things that you can deliver your services with..... I spek like this because theres a catering tender available that i am striving to apply for but when i read the requiments is that you must have your own place where you are cooking the food in order to deliver the food but i do not have a place where i can cook at because i cannot afford to pay nor buy an office or kitchen to cook food at so does that mean i already see that i do not qualify for the Tender therefore my financial problems are causing me Opportunities such as this Tender...What do i do when things are like this...?
    0
    Comment actions Permalink
  • @SimplyBiz I do agree as i have seem some business fail even when they had the funds. So my take is it all boils down to how you manage your funds. As a business owner i strongly believe it is important to teach yourself things like accounting/bookkeeping (online courses) so that you can have an understanding of how your business is doing and can quickly make adjustments should you be able to see a red flag.
    0
    Comment actions Permalink
  • @Conn8ctIT absolutely. All to often business owners avoid what they don't understand fully - e.g. accounting and tax etc - which is a mistake. Start small even if its on an excel sheet for starters.
    0
    Comment actions Permalink
  • Forecasting the cashflow gives a clear look at when the money comes in and when it goes out hence laying out a chart of income versus spends and the balance left at the end of every month. A simple forecast of the cash-in and cash-out of your company.
    0
    Comment actions Permalink
  • This is the metric that will help you analyse that your burn out rate is not out of hands. Do not tend to confuse profit with cash flow. Profit is income minus the expense. However the cash in is not always the income.
    0
    Comment actions Permalink
  • Measuring the time and specific efforts needed to make a sale are critical. This will help you as a business owner review a type of pattern of what works best and how long it does. True success comes through repeating the most critical and efficient steps more often.
    0
    Comment actions Permalink
  • @Rmichael this point makes complete sense and I can strongly relate to this from my company. One should not complicate the process of becoming successful they just need to be disciplined and repscet the process.
    0
    Comment actions Permalink
  • @SayoF thank you Sayo. Well noted:)
    0
    Comment actions Permalink
  • @BrettK very key point here Brett thank you.
    0
    Comment actions Permalink
  • @SayoF agreed very strongly aroung this. This point is also key -Measure how much time effort and money it takes to make one sale; this will tell you whether your pricing is right and if you’re making the profit you think you are.
    0
    Comment actions Permalink
  • I like this point - decide what asset value your business should have in five or ten years then look at what has helped you get closer to that goal and what hasn’t. Thank you SimplyBiz
    0
    Comment actions Permalink
  • Thank you for this and I feel this advice/tactic is always promising to earn passive income. -Come up with other ways to keep cashflow going beyond your invoicing and receiving cycle; this includes things such as asking for deposits and relooking your budget.
    0
    Comment actions Permalink