Keeping on top of your business finances, whatever industry you are in, is essential and allows you to keep abreast of what is going in and out of your business. It also helps to be organized so that you aren’t feeling anxious when it’s time for Mr. Taxman to come along to review your financial state.
To help kick start your finances so that you keep on top and in good financial health, we’ve put together some suggestions for you.
Prepare your taxes
Ensure that all your documents, statements and balance sheets up to date and in order. If you have been tracking your finances throughout the year then this should be an easy task. If not, you could find yourself having a rather large job on your hands. Start as early as possible so that you don’t receive a hefty fine should you be running behind schedule and ensure that going forward, you keep on top of your taxes.
Do an annual review
Have a look at where your money has come and gone from over the last year. What is your biggest expense? Where is your biggest income coming from? This review will allow you to work out where you need to focus your efforts in the New Year and where you maybe need to cut back.
Understand your numbers and then remember them
Do you understand what you need to be making to turn over a profit? What are you taking for yourself as a salary and should you be looking at either cutting back what you take or can you afford to take more? Keep an eye on your sales and what is coming in and whether you have had any dips in revenue. It may be the case that you start to see a trend forming over the previous years as to when you had more income coming in and when there was a dip. This will allow you to plan effectively for those times when the income may be low.
Related: Break-Even Analysis
Budgeting is key
How much can you afford to spend this year? Do you have your business plan to hand to make sure that you are hitting your goals and target? If you are finding that you aren’t meeting those goals, maybe you need to move where your budget is being spent or make cuts so that you can ensure profitability in your business.
- Training – If you can afford it, it might be worth looking at investing some money into training for you or your team. It’s always good to keep abreast of what is going on in the industry you are in and any tips and tricks along the way to help you perform better as a business.
- Marketing efforts – If you haven’t really had a marketing budget before but have some cash aside that you could use to help promote you better, start by doing a bit of market research into where your target audience digests their daily news, whether they spend their time on social media, what offline publications they read. This will allow you to look at advertising costs or ways in which you can target your market.
- New internal systems – Could a new internal system help you to work more cost-effectively if you were to make the purchase? Sometimes, investment into technology – while sometimes expensive – can be more worthwhile in the long run. If you can’t afford new systems, then ensure that what you do have is kept up to date with the latest updates and is well looked after so that it will last you a long time.
Keep on top of your debts
Your long term goal should always be to pay off what you owe. Put a budget plan in place that looks at what you can afford to pay out each month. If you have made a profit on last year and can afford – with the business projections in place being successful – to pay back more on your debts, do so. This will hopefully see you paying off your debt sooner, which will see the interest you pay back, hopefully, become less.
Written by Doug Barden for Business Know How