Being in business can be hard work and if we are not on top of everything, then sometimes profits have a way of pulling a ‘Houdini’ on us and simply evaporating … so I wanted to share with you a quick (but effective) batch of financial tips that any business owner can implement.
35 Quick Financial Tips for Business Owners:
- Always buy in bulk, and don’t be afraid to negotiate a better price, or ask for discounts.
- Don’t discount yourself, instead ‘value add’ or package your products or services; discounting erodes profits.
- Make sure you invoice correctly and promptly.
- Don’t overspend during the early stages of your business. Stick to your budget.
- Make use of online solutions such as MYOB, Xero, Cashflow Manager, Quickbooks, or the free Wave Accounting software.
- Always back up AND test your backup process that you can actually restore. Backups which restore as corrupt are useless.
- Keep an eye on money that is due to come in, and make sure it does. Chase money weekly and diarise promises by debtors to see if they occurred and if not, follow up promptly.
- Make sure that your business finances are separate from your personal finances. Separate bank accounts are a must.
- Don’t put off bookkeeping work; break things down into small categories so that the task becomes much more manageable by the end of each month. I have four files, so I do once every week and that keeps me up to date.
- Go paperless. This will help reduce cost (paper, toner and time filing) as well as help the environment.
- Ensure that your customers have different payment options such as cash, credit or debit cards, cheque, PayPal, etc. to make it easier for them to pay up. Ensure these options are listed on your invoice, along with your phone number and email so if they have a query it’s easy to sort out so you can get paid sooner.
- Establish a standardised policy for payment terms.
- Secure deposits to ensure that your basic costs are covered should your customer cancel a contract.
- Ask for progress payments, especially on large jobs, to lessen financial risks.
- Don’t be afraid to ‘freeze’ a client if they don’t pay. Larger customers can sometimes try to ‘bully’ a small supplier and before you know it, they have gone bankrupt and you’ve been ‘done’ for far more than you should have.
- Make sure that you meet tax deadlines, and don’t use money intended for this particular purpose. A great method to facilitate this is to have a GST/Tax/Super savings account which you only use for those purposes.
- Ensure that you get (and study) monthly reports, ie Profit & Loss, Balance Sheet, Debtors, Creditors, Payroll, Budget –v- Actual, as a minimum.
- Invest in new technology which will improve your system. You will save money in the long run, but be sure to invest time investigating the option and doing your due diligence; the wrong software won’t effect a saving.
- Invest in an excellent accountant, but don’t pay based on their status or prestige location; invest in someone who does a great job and will give you exceptional advice.
- Don’t just settle on your rental amount. Do some research into office spaces in the area before deciding to rent and again, negotiate. In my region at present, vacancy is up, which makes it a tenant’s market; so make a great deal.
- Have a budget and build in a contingency cost (suggest 10%). If you can’t make a budget work on paper, it will never work in real life. Check your actuals to budget every month and review the gaps and find out the causes. Use your budget as a road map as it helps maintain the direction of your business.
- Restructure your loan repayments. Round up (to pay a little extra) on your repayments to help pay your loan much quicker. If you don’t have a mortgage broker; I can recommend an excellent one to you; they shop around for the best deal and often at no cost to you – the banks end up paying them, but they are independent from the banks.
- Costs are rising, but you can still get a better deal. Shop around for suppliers before deciding to take the deal.
- Plan early so that you can act quickly if there’s a sudden movement or change in interest rates.
- Plan in advance; purchases made last minute don’t allow you to shop around, or mean you have to settle.
- Examine capital purchases and ask yourself if it can generate cash and pay for itself. Factor in improved productivity and labour saved; but don’t guess; do the maths and work out how long it will take for the item to pay for itself.
- Don’t hire too many staff early in the business. Make sure that all employees are working to their full potential and if you are unsure, use casuals or contractors initially; they are very flexible and work only when there is work to be done.
- If you’re having financial problems, don’t be afraid to talk to your business advisor or accountant. Whilst some say talk to your banker – be wary; remember their primary concern is the bank – not you. However, don’t bury your head in the sand and ignore a financial problem.
- Have risk management strategies. Factor in answers to questions such as the loss of major clients or suppliers. How will you cope if your computer system crashed, or you were hacked or a staff member stole your client base? By looking at these problems, you can then build in protection strategies.
- Hire experts or specialists. Their salary may be a bit higher but they tend to be more productive and get things done much quicker. An example is a bookkeeper or marketer or social media consultant.
- You don’t need to spend too much on new products. Launch prototypes to smaller markets to test them out, and build on that. It gains interest and you will most likely get useful feedback.
- Consult an insurance broker to ensure you are covered and your business is protected. Again, if you need a connection, I know a couple of great ones.
- Make sure you’re familiar with the laws you need to follow as a business owner.
- Ensure you have the right amount of stock to be profitable – don’t carry too much stock, or too little.
- Find a trusted mentor or business coach. We all need help sometimes, and the best of the best always have a coach; look at top athletes as an example.
If you need help with any of the above, whether it’s an introduction to a great broker, or you’re interested in learning more about my business coaching services, I’d love to hear from you. I’ve been assisting Aussie businesses for 30 years, have Accounting qualifications, personally grown a business from a garage to five locations nationally, have been coaching for nine years and have published almost half a dozen business education books – a wealth of knowledge and practical experience I share with my clients. My direct number is 0411 622 666; the first session is free. Call me.
