1. Take Ultimate Responsibility
When running your own business, it is important to delegate different areas to different staff and outsource other elements as necessary. This can allow you to focus most of your time on the core parts of the business and on your own strengths. However, it is even more important to ensure you oversee all areas of the business as you are ultimately responsible for these. Yes, you can trust people but you need to check in from time to time on the various elements that are all key to the overall success of your business.
It is also valuable to get some insight to the basics of each element, so you can understand what is being done. You don’t need to know every detail or micro-manage your staff, but you should understand what they are talking about!
2. Keep records as you go along
While it would be easy to say that you should keep records of everything you do, the reality is that you may not maintain that, especially in busy periods. However, when it comes to the financial aspects of your business, it really is vital that you prioritize record keeping. In this way, you can stabilize your finances and understand your financial situation at a glance. Some key records are:
- How much you are owed and by whom – invoice tracking
- How much you owe and to whom – Invoice tracking
- Business expenses – to claim against your tax bill
Loans, revenue from sales and other cash infusions are easy to lose track of, but you need to keep tabs on all your incoming cash flow. If you don’t, you could end up underpaying your taxes, and that can lead to avoidable penalties. As with expenses, your accounting method will determine exactly when to record income.
3. Use accounting software that makes your life easier
Like every other aspect of life, there is a multitude of tech that can make your life easier. You are probably aware of some of these things and have spent wisely on quality hardware etc. When it comes to accounting, it is also wise to use an easy to use yet powerful cloud accounting system. These can completely revolutionize your record keeping while also making work easier for you and your accountant.
Check out our comprehensive guide to cloud accounting software.
4. Keep tabs on labour costs
Hiring staff is an important step in your small business’s growth and should be done when necessary. This may be when you need more time to focus on growth or other aspects of the business or perhaps when you have a need which is not a core strength of your own. It is important not to leap into hiring too soon but equally, holding off hiring will stifle growth and increase what is required of you.
When hiring, look for good value by ensuring those you hire will add value through their daily activities. They should be paid a reasonable wage which is in keeping with the going rates. Find a balance between low cost and experience relative to the job required and don’t be tempted to overpay for a particular job.
5. Be prepared for major expenses
When starting out, it can be difficult to set aside money for large expenses. However, any amount you can dedicate to this purpose will be a medium to long term saving on the interest you would pay for a loan. Whether it is for equipment, stock, property or anything else, you should plan in advance for when you really need it, how you will pay for it and when it must be paid off. By doing this, you ensure your cash flow is protected and the major expenses won’t hamper the day-to-day running of your business.
6. Create financial projections for future years
Even if your business is financially sound today, you want to make sure things stay positive. Using financial projections and reports—like a common size analysis or general profit and loss statement—you can estimate where your company will be the following year and even two or three years down the road. Financial projections can help you figure out where to invest business revenue and whether and when you’ll need to start applying for a business loan.
Financial forecasting can be tricky because you have to figure out how expenses can change due to natural forces (e.g. inflation) as well as decisions by your clients. The same is true for revenue, where you’ll have to factor in price increases and the number of customers marketing will generate each year. Sitting down with your accountant or using accounting software are the best ways to develop realistic financial projections.
7. Choose an accountant who works with you to reduce fees and complications
At Bradan accountants, we work with small businesses to ensure their finances and lifestyle are all that they wanted them to be when they were considering getting into business . This means giving sound advice which is specific to their business as well as being available to discuss their needs and goals.
We have been utilizing the power of cloud accounting tech for many years and advise all clients to do the same. For a discussion on your situation and a free consultation, visit our Contact Us page and we will be happy to arrange an appointment that suits you.