When you start a business, more often than not it seems like the default setting with regards to anything finances is “IGNORE”.
Having a successful small business means that at some stage you’re going to have to take your finances seriously and give them some love. If you’re set up and organised right from the get-go, then your everyday operations will run so much more smoothly and you won’t find yourself scrambling every-time you want to know what’s happening money-wise in your biz.
Here are some essential things to focus on to you get you off on the right financial foot
1. Open up a business bank account
Anyone who’s been following me for a while will know that this is always at the top of my list, and one of the first things I ask people when we get together for a business chat.
Depending on your organisational structure of your business, you may or may not be required to have a specific business bank account, BUT it is absolutely essential if you are going to take your business seriously.
Having a separate bank account means you can easily track your business income and expenses, everything is in the one place and makes all your bookkeeping and tax tasks so much easier.
Which leads me to….
2. Set up a bookkeeping system
Systems for your business are your best friend, and this goes just as much for your finances.
Depending on the size of your business, there are a few different options you can choose from when choosing a bookkeeping solution, from manual, excel DIY options through to electronic, cloud-based systems.
In my opinion, if you’re planning on growing and scaling your business, online accounting software such as Quickbooks is a valuable addition to your systems, no matter what stage your business is at. Not only does it have the structure in place to help you easily keep track of your finances, but it’s cloud-based, so you don’t have to worry about backing up your data, and you can access it on the run.
3. Know how you're going to get paid
For your business to make sales, you’re going to need to have methods in place for people to pay you money.
Not only will you need to work out your payment terms and the ways in which you can receive cash, but you’ll need to ensure you have your invoicing documentation up to scratch so that it complies with the requirements in your country or region.
Investigate automatic payment platforms such as Paypal, Square, Stripe etc, or even the good ol’ fashioned direct deposit method. Not only should your accounting system be able to link with one, if not all of these methods, but you can also set up your invoicing template in your system so that sending out invoices to clients is a breeze, along with keeping track of money owing and sending out reminders if need be.
4. Create a budget
When I talk about creating a budget in the first instance, think of it more like a wish list where you get to reverse engineer the income and expenses you would like to see move through your business.
Creating a budget will help you get clear on your financial goals, and provide you with a baseline to measure against as your business progresses.
Forecasting your income and expenses will also help you manage your cash flow as your business gets up and running.
5. Manage your cashflow
This is another one of my favourite steps in setting up strong financial foundations for a business. So much so that part of my business is designed around helping business utilise effective cash flow management strategies to build sustainable and profitable businesses.
Cash flow is the lifeblood of your business. This means keeping track of money coming in and going out of your business is vital. Not only will you then have your finger on the pulse, but keeping track of cash allows you to plan ahead, leaving you feeling more confident and able to make smarter financial decisions.
Ready to get the financial foundations sorted for your business?
Nail step #1 and tick that bank account off your list. Click here to grab a list of Australian low or no cost business bank accounts for you to check out.
Book a chat with me and we’ll see where you’re at, what you need and where I can support you. Because, lucky for you, I’m one of those people that love the financial side of business and want to share the love.