Some time back I worked briefly with a young, enthusiastic entrepreneur who had what seemed to be a thriving, growing business. Just a year into the business his sales were escalating and he decided to quickly expand his operations from one to three locations. This was leading to some cashflow issues and why he contacted me.
As we delved into the business finances, we discovered a catastrophe already in the detonation stage. The fuse was lit and there were no good options to stop the inevitable. In less than six months his business folded and he filed for bankruptcy. Why? This vibrant, bright entrepreneur was consumed with expansion, but because of significant mindset blocks about business finances, he made a series of poor business decisions that ultimately led to the downfall of his business.
As a small business owner, managing your finances and bookkeeping can often feel overwhelming. However, shifting your mindset can transform these tasks from burdens into opportunities for growth. Here's how you can change your approach to better your business instead of letting it falter.
Separate Personal and Business Finances
Mindset Shift: Mixing personal and business finances leads to chaos and missed opportunities.
Actionable Tip: Open a separate business bank account and use it exclusively for business transactions. This separation simplifies your bookkeeping and ensures that you have a clear picture of your business’s financial health.
Embrace the Importance of Bookkeeping
Mindset Shift: Bookkeeping is not just about compliance; it's a powerful tool for decision-making.
Actionable Tip: Regularly update your books. Schedule a specific time each week to review and record your transactions. This habit will keep your financial data accurate and up-to-date, enabling you to make informed decisions.
Monitor Cash Flow Closely
Mindset Shift: Cash flow is not just a number; it’s the lifeblood of your business.
Actionable Tip: Keep a close eye on your cash flow. Forecast future cash needs and identify potential shortfalls early. Effective cash flow management ensures that you can meet your obligations and seize opportunities as they arise. We have a free and simple-to-use cash management tool, built in Excel, that can help you get started today. CLICK HERE to receive it.
Invest in Bookkeeping Software
Mindset Shift: Technology is not an expense; it’s an investment in efficiency and accuracy.
Actionable Tip: Choose a bookkeeping software that fits your business needs. Many affordable options can automate tasks, generate reports, and provide valuable insights. This investment saves time and reduces errors. We like to use QuickBooks Online. Read more about why we chose the QuickBooks Online platform for our clients by CLICKING HERE.
Understand Your Financial Statements and KPIs
Mindset Shift: Financial statements and KPIs (Key Performance Indicators) are not just numbers; they tell the story of your business.
Actionable Tip: Learn the basics of your income statement, balance sheet, and cash flow statement. These documents provide insights into your profitability, financial health and cash management and you should regularly review them. Consider adding KPIs to the mix. Check out our 'Understanding KPIs' blog post HERE. Don’t hesitate to seek help from a professional to understand your Financial Statements and KPIs better. Our team, here at UCentric Solutions, is here and happy to help.
Budgeting is Your Friend
Mindset Shift: A budget is not a restriction; it’s a plan for your business’s success.
Actionable Tip: Create a realistic budget that aligns with your business goals. Track your actual performance against your budget regularly. Adjust as necessary, but always have a clear financial roadmap.
Seek Professional Advice
Mindset Shift: You don’t have to do it all alone; seeking help is a smart business move.
Actionable Tip: Engage with a professional accountant or bookkeeper. Their expertise can help you navigate complex financial situations, optimize tax strategies and free up your time to focus on growing your business. Our experienced team, here at UCentric Solutions would love to help you navigate your bookkeeping when you are ready. We are just a phone call or email away!
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Changing your mindset towards bookkeeping and finances is a crucial step in strengthening your small business. By embracing the importance of accurate records, understanding your financial statements, budgeting effectively, and seeking professional advice, you can turn your finances into a powerful tool for growth and success. Remember, a proactive and informed approach to your finances will not only sustain your business but also help it thrive.
Would you like personalized help with any of these steps? Our bookkeeping team, here at UCentric Solutions, helps small and mid-sized businesses succeed by transforming your accounting into a streamlined and collaborative process - integrating automation and teamwork – all remotely!
If you are interested in potentially working with us, looking to move to QuickBooks Online or simply have questions, give us a call or email us at hello@ucentric.biz. We would love to talk with you!
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