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
- Do a reality check; be honest about whether you’re good at managing money or not.
- 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.
- Have a weekly money date with yourself and use this to catch up on your finances, address financial goals and learn more about money.
- 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.
- 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.
- Have a plan for fuel and supplier price hikes; these can (and probably will) affect your cashflow.
- 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.
- 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.
- Do your research and take responsibility for your own financial education – use the internet and online courses.
- Ask yourself the hard questions (the ‘what if’ scenarios) and answer them truthfully.