23 Oct 5 Ways for New Business Owners to Take Financial Control
Financial control. It’s something we all want – in our personal lives and our businesses – but what are we willing to do to get it?
All too often, having a clear idea of where your business is financially, seems impossible, let alone actually having control over those same finances.
Sometimes the idea of diving deep into financial records and reports is too overwhelming, so it’s put off until the next week. And the next week. And the next year. Then, the next thing you know, you’re ten years into owning a business and you’ve lost all financial control.
Of course, it’s understandable when this gets pushed to the wayside. As a business owner, you’ve got a million and one things on the go each day. The last thing you have time for is studying for financial records.
But here’s the thing: when you don’t have financial control of your business, things can spiral out of control before you ever see it coming!
Financial control for new business owners
Whether you’ve owned a business for 30 years or you’re new to that world, having financial control over your business will serve you well.
In this post, we’re going to focus specifically on new business owners. We’ll talk about how they can set off on the right foot and create great financial habits that will serve them well for years to come.
So, here are five ways for new business owners to take financial control of their business.
1. Brush up on your financial literacy
First things first: managing your business’s finances begins with understanding them.
If you don’t know what you’re looking at, how can you expect to make the best financial decisions for your business?
Becoming financially literate in your personal life is one skill. But as a business owner, financial literacy takes on a whole new meaning.
The good news is, there are all kinds of free resources available that will have you financially literate before you know it…including on our blog!
Here are three great places to start:
- 5 Financial Business Reports You Should Be Reading
- Understanding Your Profit and Loss Statement
- 5 Bookkeeping Questions Every Business Owner Must Be Able To Answer
2. Do a deep dive into your financial and market logistics
Now that you know the difference between cash and accrual accounting and other important financial considerations for business owners, it’s time for the next step to taking financial control.
You need to ask yourself some important questions about your business, like:
- How much money do I need to start/run my business?
- How much money do I need to make to be profitable?
Now, with these answers on hand, you can move onto step three.
3. Financial forecasting and cash flow planning
It’s time to create a spreadsheet! Don’t let that scare you away – it will become your best friend once you get the hang of it!
You’ll use this spreadsheet to track projections for inflows and outflows of cash for your business. Then, you can use this spreadsheet to plan for periods that might be tight, or when you can expect to have big expenses, like license renewal or buying new equipment, depending on your industry.
4. Creating a financial dashboard
Once you’ve started using your spreadsheet for financial forecasting and cash flow planning, it’s time to look at your key performance indicators. These are the quantifiable measurements that can tell you how your business is doing.
Every business has certain key performance indicators (KPIs) it uses to determine where it stands. During step #1 when you improve your financial literacy, you’ll cover most of these KPIs.
They can vary from business to business, but here are a few common KPIs financial dashboards often include:
- Operating cash flow (OCF)
- Net profit margin
- Gross profit margin
- Working capital
- Budget variant
- Sales growth
5. Get expert help taking financial control
You’ve taken the first steps toward financial control of your new business – it’s time to celebrate! But it’s not time to stop.
As your business grows, so will your financial planning needs.
Your responsibilities as a business owner seem to expand each day. While you might start off with the intention to maintain strong financial control of your business, it doesn’t always turn out this way.
Let us help!
At Two Roads, we relieve the burden and mystery of bookkeeping. We empower new or experienced business owners to focus on what they’re most passionate about and what they do best while we take care of what we do best.
Our bookkeeping services are built with your unique business in mind. We’re here to help you every step of the way. Whether it’s starting off on the right path with financial control of your business, or taking back control once it’s long overdue, we’ll get you there.
Click here to schedule a call and see how we can help you today.
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