The skills you bring to make your product or services successful is what differentiates your business and drives success. Unfortunately many business owners forget that finance management make or break any businesses future.
Falling into bad financial habits early and not implementing processes to manage the money will one day harm your business. Good processes will ensure all your existing resources are being used effectively and efficiently; providing an optimal return on your investment. Below are some things future proof your SMB.
Monitor and measure performance
Always plan for the future. There will always be issues you’ll face in the running of your day to day business. However, if you’re not looking towards the future when it comes to managing your business finances, you’ll always be behind your competitors.
It’s very important that you monitor the movement of your cash flow. Put aside an hour or two each month to have monthly health checks on your financial performance. Make sure to use past financial statements to project your expenses, cash flow and future revenue. Being conscious of how you’re financially tracking will help you make informed decisions.
Have a clear line between personal and business finances
Giving your customers clear channels to information will create frictionless experiences. Learn how to put all of your customer support interactions in one place, so your communication is more personal and efficient
Elevation and optimize your financial processes
In this day and age, using a manual spreadsheet isn’t enough for small businesses. It’s vital that you keep track of your expenses accurately so it makes it easier come tax time.
Depending on your budget and what you’re looking for, you can look at hiring a part-time bookkeeper or automate your financial processes by purchasing an accounting software like Xero or Quickbooks. Make sure you assess your existing financial processes and the tools used to understand their return on investment before making any changes.
Invoicing is key
One of the biggest killers for small business is the lack of cash flow when clients don’t pay on time. Take some time and make sure to create processes around invoicing the and the follow-up.
To try and minimize the impact of customers not paying on time, try to:
- Send out invoices as soon as goods and services are completed
- Follow up! Once invoices are sent out, make sure you have a follow-up process implemente
- Create templates and set out a best practice documentation to make sure it's done right, every time
- Review your terms of payment. Optimally setting payment terms to 10 days is ideal to make sure that payments are not lost or forgotten
Businesses need to be mindful of the pitfalls to increase their chances of success. Learning about the basic skills needed to create a steady financial future is the initial steps to moving your business in the right direction.