5 Ways to Better Manage Business Finances
Even if your business is doing very well, we are willing to bet you probably don’t truly enjoy the task of managing finances and reconciling accounts. Most business owners don’t. They are entrepreneurial, action-oriented people by nature, and the idea of sitting in a chair and reviewing rows of numbers and figures just isn’t that appealing.
Looking over the books from time to time is a necessary evil, however, lest you suddenly find yourself in the midst of an unexpected crisis. But if you have to pay attention to your finances, we think you should make it as easy as possible.
With that in mind, here are five ways to stay on top of the money side of your business:
#1: Review Statements and Balances Once Per Week
When you get behind on your bookkeeping and financial reviews, it becomes a vicious cycle – the longer you go without doing it, the bigger the chore seems, and so the more you want to put it off. Let this play out for too long, and you’ll end up in a situation where you don’t really know how much money is coming into your company, how much you’re spending on expenses, and whether certain accounts are going overdue.
The simplest answer is to set aside a few minutes a week, preferably on a Saturday morning or some other quiet time, to review statements and balance so you can get a sense of how everything looks.
#2: Compare What You See Against Short-Term Goals
As you perform these regular periodic financial reviews, try to compare what you see against your own short-term goals. A lot of business owners take the long view with their companies, which is generally a good practice. However, the best way to achieve annual targets, as an example, is to hit your quarterly and monthly goals in the meantime. So break down your business objectives into smaller pieces, and then be sure to compare your financial results against them.
#3: Use the Right Measuring Sticks
Progress is a relative thing, of course, and it’s important that you use the right measuring sticks when you assess the financial health of your company. For example, sales tend to be seasonal, so compare your monthly revenue against the same month for the last year. Doing so will keep you from missing trends and areas of concern that might otherwise remain hidden.
#4: Don’t Attempt to do Everything on Your Own
No matter how proficient you become at managing your company’s finances, it’s always a good idea to get some outside help (usually in the form of a licensed bookkeeper or certified accounting). Not only does having another pair of eyes help protect you against errors and oversights, but someone who knows the ins and outs of business accounting might be able to point out opportunities for you to save money or raise revenue. The cost of working with a professional is incredibly small when compared to the benefits you receive in return.
#5: Make Managing Money Convenient
By using tools like cloud-based accounting software, you make managing your company’s money less of a hated chore. That’s important, and not just because it helps your mental well-being. The more you dread going over financial figures and reports, the less time you’re going to spend with them, and the less you’ll know about the financial health of your business as a consequence. So by making things convenient – with the right tools, a quiet environment, and maybe even a treat (like a cup of coffee you enjoy) – you can turn the job into something that brings you a little less anxiety.
You don’t have to be a professional accountant, or someone who loves managing business finances, to do the job well. Use the right tools and make the right habits, and you might even find that it’s not as terrible as you once thought it was.
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