Finance can often be perceived to be dull, boring or far too technical but see below – you might be a bit more excited about managing your business finances when you realise how simple and powerful it is!
1. Manage your cash. It’s easier than you think: construct a simple cash forecast showing cash coming in, cash going out and what you have left. You can then see where any gaps occur and plan accordingly. This is powerful & can be life-changing – have a go!
2. Check your bank balance every day. It takes less than 2 minutes to ensure monies have come in from customers that you’re expecting and that nothing has gone out that shouldn’t have. Banks can make mistakes – keep an eye on them!
3. Invoice promptly and accurately. How do expect to get your money in otherwise?
4. Ensure your customer pays promptly. “Getting paid is the most important part of your business” says Lord Alan Sugar. He’s spot on – do your due diligence on customers, agree payment terms BEFORE doing business with them, call to ensure they have received your invoice and call the very day payment doesn’t arrive. It’s harder for them to mess with you when you’re on top of them.
5. Monitor your business spending. Check what value each purchase is adding to your business and if it will assist with your growth plans.
6. Treat VAT as a precious jewel! VAT never has been yours and never will be yours. You are entrusted with its safe keeping until you hand it over to the taxman. Siphon it off to a safe account the second you receive it and don’t let it out of your sight until it is time for you to pass it on to its rightful owner. Never ever ever mess with the taxman….ever.
7. Plan your way to business growth and success. “You get what you measure.” If you are losing weight, you set a target weight loss by a certain date. Exactly the same for your business – set your target for a specified date and break it down into baby steps to ensure you achieve it.
8. Know your most profitable income streams. Then you know where to focus your efforts and perhaps which income streams to ditch. This is how successful companies achieve their growth.
9. Turnover is vanity, profit is sanity, cash is reality. A really useful phrase to remember. Ensure the revenue streams you receive are profitable, unless you have a strategic reason for doing otherwise, and ensure the cash comes in from those customers otherwise you won’t stay in business long.
10. Save for a rainy day! Keep something aside for the dips you will undoubtedly experience, no matter how small. You’ll appreciate it when the time comes.
About the Author:
With a background as a Commercial Finance Director, Andi Lonnen now delivers upbeat, highly practical and business focused financial training and coaching around the UK and beyond: www.andilonnen.co.uk