I was tempted to write a click bait title for this article, ‘One thing to improve your business finances’. Would it grab your attention and distract you from the million other things you could read, watch or do? Maybe, but it didn’t feel authentic for me. Because there isn’t ONE thing, there isn’t a silver bullet, there isn’t a magic wand that someone can wave to make everything better/easier/cheaper/smarter/faster.
As a business owner YOU need to be part of the decision making process. YOU know your business best (or at least I hope you do). YOU need to review and analyse everything and anything that someone else tells you about your business. YOUR perspective is one of the most valuable.
So instead of telling you a single thing that would work for some businesses I’m going to give you some options of one things that you could use to improve your business finances.
There are three main categories when it comes to improving your business finances; systems, management and mentality. And I’m going to try to keep my tips really simple so you can implement ONE straight away.
Finance Systems
Bookkeeping
Do you think you’ve outgrown your current system? Research to see what other options are out there. Watch a few videos on YouTube to find out if something else may meet your needs better, start with a beginner video and then get more specific from there, especially focus on the aspect that frustrates you the most. Then you’ll be more informed and able to decide IF you want to switch.
Record Keeping
Do you have paperwork strewn all over the office, in four different places plus your handbag? Make a system for this, it doesn’t need to be complicated. You could go digital and start using an app on your smartphone to take a photo as soon as that paper hits your hand (it takes moments) or a colourful file that all business finance paperwork goes into that you deal with once a week (put a time in your calendar).
Inventory Management
What do you have in stock, ready to sell, work in progress and supplies. You don’t need to get into a huge record keeping exercise, you can if that’s helpful and you have time, but even a regular look into your various stock piles can be useful information with which to make purchasing or production decisions.
Pricing
When was the last time you reviewed your pricing, or a single aspect within your pricing like overhead, desired profit margin or material costs? If the income streams in your business have changed significantly then it may be worth revisiting your pricing. It may also be useful to do a bit of market research, aka stalking some other sellers online and seeing if they charge a similar price to you (this isn’t a concrete reason to change but useful data for a deeper review).
Money Management
Tracking
If setting up a formal bookkeeping system seems like a step too far keep it super simple with a running record to track your income and expenses. This doesn’t need to be an attempt at replacing bookkeeping, it doesn’t need to be used at tax time, but it can give you just enough insight for some reassurance. To keep it super simple, at the end of each day write down your total income and total expenses. Do this consistently in the same notebook or spreadsheet and then total it up each week or month.
Budgets
Another week, another finance blog, another mention of budgets! If not knowing how much you ‘should’ spend on materials, marketing, outsourcing, mass product creation is frustrating you a budget could be a real help. How? My top two tips, make it a variable budget using percentages like 30% of income towards product creation, 20% toward marketing, 10% overhead and 40% to paying myself. Tip two is look backwards and review your business history BUT add in the lessons you learnt along the way, too many or not enough markets, too much or not enough social media promotion, too much or not enough stock in your online shop.
Cash Flow
If money seems to disappear from your account like magic you could start analysing where that went or set up a more formal money management system like Profit First. It’s also good to compare to what you though would happen, how much did you expect to make in wholesale, or spend on materials for your new product?
Mentality
Attitudes
I’ve been talking more about attitudes around business finances recently, both applying curiosity and trying a different perspective. And this week I just wanted to reiterate that your attitude to business finance and money has a pervasive influence on your experience. If you haven’t already try curiosity and wonder. Maybe try the attitude that you get to be your own boss enabled by a business that needs bookkeeping. Gratitude is another positive emotion I try to install in my business, each day I track my income and write down one thing I’m grateful for, from hot cross buns (yum) to being flexible with my time for mid-week long lunches (returning soon).
Beliefs & Values
I said I’d keep these tips simple and quick but changing your beliefs and values isn’t a quick process BUT it is super important especially if they are holding your back. Not all beliefs and values are negative, valuing time with your family, believing people generally want the best, even believing you’ll always find a car parking space (yes I do). Understanding the ones that work for you as well as the ones that work against you is a life long pursuit. BUT optimising towards the ones that work for you can help you deal with the ones that don’t, and ease you into being able to change and move away from any limiting beliefs or undesirable patterns.
Language
I honestly believe the way we talk about a subject has an impact on our actions, beliefs and attitudes. Phrases like ‘I hate bookkeeping’ and ‘I’m just not a numbers person’ reinforce… This language reflects some of our underlying beliefs and isn’t something that will change overnight or with the flick of a switch. But we can start to notice our language, then mentally correct ourselves and you don’t have to jump from ‘I hate bookkeeping’ to ‘I love bookkeeping’ but slowly you can progress through ‘Bookkeeping is a necessary task’, ‘Bookkeeping isn’t my favourite thing’, ‘I’m getting better at bookkeeping’ through to ‘Bookkeeping is okay’. Even keeping is neutral is more powerful than a negative reaction.
BUT I want to stress pick one thing, maybe two things, if you try to tackle everything on this list of my main ideas you’ll probably become overwhelmed and not make a significant impact. Focus on one or two things at a time, don’t have a budget and think one would be useful, great start one. Wondering if you should adjust your pricing because in-person events are cancelled and you want to incorporate shipping costs, excellent do that one thing.
Share with me what ONE thing you are going to try in the comments.
Need Help?
If you need help building an action plan around what to change or implement in your business then my money management map session might be just the ticket. Over an hour we will gently explore into how everything finance works for you, how it aligns to your income streams, your goals and how we can make it easier or quicker or both. Jump in and book at bit.ly/bookwryghtaccounts or grab a free virtual coffee for more information.
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