sjsmith.com.au - blog

What Every Business owner should know

The subject of finance is one of the biggest headaches for many small business people.  I think many people feel that they just don’t have the knowledge they should when it comes to running their business.   I know because I’m one of them!

As I mentioned in last last weeks blog (Setting Financial Goals), at its simplest, finance is just about money in and money out.  How complex your finance needs are is often determined by the size of your business or how quickly you grow.  If you are a small scale manufacturer you may not need to be thinking about your credit options just yet.  Maybe you are self funded or managing on a basic business loan.  You must also ensure that you’re keeping and paying your tax obligations.

The real reasons or  getting to grips with what your financial needs are, is about having the right resources to effectively manage your business and so that you can plan for the future. There’s little point in planning to research and develop twelve new product lines if you don’t have adequate funding to get them ready to launch!

Keeping good records is one of the easiest places any business can start to take control of their finances.  Even if you’re not doing the data entry or record keeping yourself, you need to be keeping a regular check on how your figures are going.  Are they rising or falling?  Whether you’re doing you’re books manually or with accounting software, regular updating is the key to keeping on top.  If you are using accounting software make sure it’s suitable for your needs.  You probably don’t need a full blown package with payroll if it’s just you at the moment.

Another aspect you need to keep a close eye on is your cash flow.  Are all invoices being paid on time? Both incoming and outgoing.  Are customers paying on time? Do you need to tighten up your terms? Are you paying your suppliers on time? I’m a firm believer in business karma.  I think if you want to be paid on time then you need to lead by example and pay what you owe on time.

It’s alright if you have someone else oversee the accounting basics of your business but remember, as the business owner, you are ultimately responsibility for ensuring the financial health of your business.  If you feel like you don’t understand your basic financials then go get a book, take a course or speak to an accountant.  Even if you think you’re not great with numbers understanding your figures is essential knowledge for any business owner.  It’s all learnable!

Till next time,

Sarah-Jane X

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