25 Principles of excellent financial management – For business owners – Part 2
Following on from our post at the beginning of the month, we’re covering the next 10 steps to great financial management for your small business.
From tools of the trade, to tips and tricks we’ve studied – you need these practices in your business today!
11. Look after your credit score
It might seem like a no brainer, but your credit score is important. As a business owner, you may want to borrow money or lease equipment. Alongside your business plan and proof of earnings, a good credit score can help to support you when go looking for help. You can check on your credit score easily using tools like Experian.
12. Set ambitious but realistic goals
There’s nothing wrong with setting your sights on a six-figure business or million pound turnover. However, it’s best to keep your goals regular, consistent and realistic. You don’t want to be feeling disheartened when you see how far away you are from your target number.
13. Review expenses regularly
Do you know how much you’re spending? Signed up to subscriptions you no longer use? Paying for a service that isn’t bringing in a good ROI? Get to grips with your expenses and know exactly how much it’s costing you to run your business. If you fall on hard times, you’ll know where you can cut back.
14. Pay all bills on time
You want your figures to be as up to date as possible. Try to pay bills as soon as possible to ensure that the figure in your business bank account is accurate. Leaving bills unpaid could lead to interest or a huge list of expenses to settle at once.
15. Assess different payment types
Depending on how your customers pay you, it might be worth shopping around when it comes to payment providers. For overseas clients, portals such as Stripe and PayPal may be a safer option. However, most third party payment portals charge a fee or offer poor exchange rates. Be sure to investigate the most cost-effective option for you.
16. Check in with your business plan
Are you on track? It’s hard to know how you’re doing if you’re not touching base with your business plan every now and then. Make time, at least quarterly, to sit down with your business plan and see how you’re doing.
17. Think about your pension
Another thing to speak to your accountant about is how to manage your pension. If you are self-employed or running a small business, this is your responsibility. There are many different ways, means and schemes for collecting a pension – but ask a financial expert for customised advice.
18. Know your day to day costs
Managing your finances comes down to the nitty-gritty. Ever heard the saying ‘look after the pennies and the pounds will look after themselves’? – that applies in business too. Fans of The Lean Start Up recognise the importance of keeping your day to day costs down, knowing the benefits will accumulate later.
19. Get the right funding
Depending on the type of business you’re in, and how long you’ve been operating, there are various options when it comes to getting funding. For innovative new products, there’s Kickstarter and other crowd-funding options. For businesses who want to scale, there’s AngelList. For many, it starts with borrowing from friends and family. Ensure that you’re aware of the interest rate and pay-back terms with any investment. If you’re concerned, run it by your accountant first.
20. Find a great accountant with a track record
By far the most useful tool when it comes to financial management, is a trustworthy accountant. Getting to know you on a personal level allows your accountant to recommend the best possible products and avenues, based on your individual needs. When choosing an accountant, see if you can find out what other businesses they look after. Do they have a long, positive track record? Do they have good client testimonials and a professional looking online presence? Be selective and don’t be afraid to ask lots of questions.
Thank you for checking out our top 20 tips for great financial management. Didn’t see the first 10? Check out that post, here.