Four Good Money Habits That Can Spell Good News For Your Business!
Good financial habits are one of the best options for you to improve your wealth personally, but they can also give your business a major boost. If you are thinking about growth, rethink your strategy on how to approach your business finances and make a huge difference in improving the cash flow and profitability. As you plan the next phase of growth, here are four smart money habits you can inculcate.
When Saving is Top Priority
When you are conducting a business, you have to spend more money to make money. However, remember it is as important to save cash to fortify your business. When you have liquid savings on hand, you may have a solid foundation for pursuing more growth projects.
For example, when you own a seasonal business, you need your cash flow to peak in spring and summer. If you’re thinking of offering a new product or service, you can try and boost sales during the fall and winter months. This way your savings will cover your day-to-day expenses and fund your marketing budget as you introduce a new product.
One simple way to start saving is to start automating the process. As you review your monthly business budget, estimate how much you can commit to saving. At first, you may spend five to ten percent of your income and set the dollar amount, but this figure may not matter as much as the act of consistent saving. Remember to set a recurring automatic transfer from the business and check your account for your savings on the same day each month. As you transfer the money, you’ll be able to save it whenever a growth opportunity comes your way.
The Best Way to Track Your Savings
While it is important not to think too much about your business expenses when you are focussing on growth, it may be detrimental to your efforts if you don’t have a clue of exactly where you are spending. Hold regular meetings with your bookkeeper or accountant who manages your books to find out all about your finances. Start with one month and then begin your way back to the year before. If you have a good idea about your expenses, you’ll know exactly where and when your expenses are increasing or decreasing. Find out where you’ll be able to cut down on certain expenses that may not benefit your business in the long run. This way you’ll be able to track your spendings more accurately.
The easiest way to keep track may be to keep a close tab on your business credit and link your bank accounts to your accounting software. Then, check your transactions at least weekly so you’ll figure out a way to find out exactly where is your money going.
Make Specific Financial Goals
When you’re trying to make your business grow, be a person with a plan and outline every step, so you know exactly where you are going. A lack of detailed financial goals in place does not sit well for your business’s future. So, the only way to go forward is to establish clear goals. If you want to increase your revenue by at least 15% for the year, then set your target and outline to find out exactly how you can hit it. That plan may also include approving more money for your marketing budget and reach out to a wider customer base or hiring new staff.
Drive Business Growth with Effective Debt Management
Debt sometimes can turn out to be a great tool for driving business growth. For example, you may have a restaurant and to open at a second location, you conduct your business via a mobile food truck. You may also need to include a small business loan as it will help achieve both of those ends and with the additional revenue, you can use it to repay the debt. The key is to have a specific plan for the debt before you take it on to improve your business. The plan can include how you can use the funding – whether it’s a loan, a line of credit, or your business credit card – and how you can use your business to pay it back.
Regular updating of your profit-loss statement and monthly balance sheets can keep a track of your business’s financial health.
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