Mastering Your Money:
Tips for Intentional Financial Management as a Business Owner
As a business owner, you have a lot on your plate. You’re responsible for your business, your employees, and your family’s financial wellbeing. With so much to manage, it can be easy to fall into the trap of letting your finances take a back seat.
The key to mastering your money is being intentional with your finances. This crucial step will make all the difference to the success of your business and your personal life.
Here are my top tips:
- Set clear financial goals: Take some time to assess where you stand financially and what you want to achieve in the short and long term. Do you want to save for retirement, pay off debt, or expand your business? Write down your goals and make a plan to achieve them.
- Separate business and personal finances: Mixing personal and business finances is a recipe for disaster. Create separate bank accounts and debit cards for your business to keep your finances organised and make tax time easier.
- Create a personal budget: A budget is simply a set of instructions for your money. It helps you manage your money and prioritise spending. Being in control on the personal side of your finances is essential to avoid overspending and provide the confidence that you have enough money to cover your expenses. Take the time to create a budget that works for you and your business.
- Track your cash flow: Cash flow is the lifeblood of your business. Two places where cash can be hiding in your balance sheet are (i) excess inventory, and (ii) accounts receivable. Stay on top of these and make sure you have a system in place to track your income and expenses. Awareness of your cash flow allows you to make informed financial decisions.
- Manage your debt: Debt can be a useful tool for growing your business, but it can also be a burden if not managed properly. Make a plan to pay off your debt (particularly non-productive debt like credit cards) and avoid taking on more than you can handle.
- Plan for the unexpected: No matter how well you plan, unexpected events can happen that can impact your finances. Build separate personal and business emergency funds to help you weather unexpected expenses or dips in your business revenue.
- Access professional support: Managing your finances can be time consuming and potentially overwhelming, especially if you’re not a financial expert. Gather a great team around you to give you space to focus on what you do best. This team can include an Accountant, Bookkeeper, Mortgage Broker, Insurance Broker, Small Business Banker, and a specialist WHS/HR provider. They’ll help keep things humming on the business side. Remember also to pay close attention to the personal side. An experienced Financial Coach can add significant value through helping you to make informed financial decisions and take your finances to the next level.
- Review your expenses: It’s essential to review your expenses regularly to identify areas where you can cut costs and save money. Look for subscriptions, services, or expenses that you no longer need or can reduce. This practice can help you free up cash and invest it in your business or save it for your personal goals.
- Automate your finances: Automating your finances can save you time and help you avoid late payments or missed bills. Set up automatic payments for recurring bills and use tools like online banking to manage your finances efficiently.
- Evaluate your pricing strategy: Pricing is a crucial aspect of your business, and it’s essential to have a strategy that aligns with your goals. Go over this regularly to ensure that you’re charging the right amount for your products or services and generating enough revenue to sustain your business.
- Monitor your credit score: Your credit score can impact your ability to secure financing, lease equipment, or negotiate with suppliers. Look at your credit score regularly and take steps to improve it if necessary, such as paying bills on time, reducing debt, or disputing errors on your credit report.
- Stay informed: The financial landscape is constantly changing, and it’s essential to stay up to date with market trends, tax laws, and regulatory changes that can impact your business. Attend workshops, seminars, or webinars, and read finance-related blogs to build and maintain your knowledge. Yes, it’s time and money, but investing in yourself is investing in your business too.
Mastering your money is critical to the success of your business. Achieving sustainable and profitable growth provides the financial foundation and confidence needed to support our bigger, most important goals in life. These goals may include providing for our families, pursuing our passions, and giving back to our communities.
Here’s to your continued success. You’ve got this!
Article credit: Sloan Wilkins – Executive Financial Coaching