Managing Your Financial Records for Business Growth
Most micro businesses and entrepreneurs manage their finances using the time old tradition of spreadsheets because it seems the easiest solution when you’re building up your business, and to begin with it is.
If you’ve had your business for less than two years then you probably have a spread sheet that records incomings & outgoings and you may have even gone as far as creating one for forecasting too.
This is however for most entrepreneurs’ as far as they will take their “financial records” due to lack of knowledge or lack of time to make their finances really work for them.
Progressing the management of your financial records can seem a daunting task; most of us just maintain them so we don’t fall foul of HMRC!
Bookkeeping isn’t everyone’s idea of a good time and if it isn’t yours then it may be an idea to look at the alternatives so you can focus on developing your business performance.
There are several options available to you that will help you to manage your financial records better; here’s a couple that might come in real handy very quickly.
Work with a Business Support Team.
A “business support team” can help you to manage the day-to-day parts of your business that cost you precious time and money.
Hand over all those time consuming tasks that hold you back from moving your business forward; such as finance management and business administration. This will leave you to focus on the bigger picture, i.e. when will you have money to invest in a new sales person, or when will be the right time to move into new premises, would it be more profitable to start providing a service in-house rather than subcontracting?
Give yourself the time and resources to be able to answer these questions and take action on implementing them.
Working with a business support team can really help you clarify the direction you need to be heading and offer you support when you’re not sure. How much should you be reinvesting back into the business vs. what you should take as a dividend? These decisions can be made by simply by having and using a good set of management accounts and a team to support you in managing it all.
If you’re not quite ready to invest in a good business support team yet there are lots of online accounting tools that you can start using yourself such as Sage, ClearBooks, Solar Accounts or Xero. They all have different benefits and advantages so taking your time to research each one is important. Keeping your financial records online certainly makes things quick and easy which leaves you time to focus on the development of your business.
No matter what stage your business is at, as the person responsible for business growth you should be making informed decisions based on facts rather than trusting your gut!
Get really tight systems in place so that you know when the money is coming in, and regularly review & update your forecasts so that you know exactly what’s expected to go out and when.
Your management accounts will help you to:
Compare Budgets with Actual Spend ‘“ useful for future forecasting.
Manage the Resources That You Have – what you can afford to have in future.
Identify Trends ‘“ do you have less money coming in over the summer but a glut in autumn?
Cash Flow Contingency – have you put cash aside to cover those dry periods.
Whichever route you choose to help you manage your financial records and management accounts, make the decision soon so that you’re able to spend more time working on your business to take it to the next level.
Q: What systems and tools do you have in place?..