The financial health of your business is essential to supporting your operations. From budgeting for your expenses to scaling at the right time, a business’s financial health can make all the difference. However, for many small business owners, figuring out how to manage finances can be a challenge. In fact, approximately 82% of small businesses fail due to poor cash flow management according to a U.S. Bank study.
To help you prevent your business from becoming another statistic, use this guide on how to effectively monitor your business’s financial well-being.
Make Financial Management a Top Priority
For many business owners, the demands of running a business are simply too many. You only have so much time and energy to go around, so sometimes things slip through the cracks. However, your business’s finances are much too important to fall off your radar.
If you find that bookkeeping, budgeting, and other financial tasks are getting behind, consider delegating other responsibilities to your team, so that you can focus on what’s important.
If you’re avoiding the financial aspects of your business because you find them overwhelming and confusing, take time to learn more about them. Fortunately, there are plenty of resources for business owners to become more financially savvy, even if you have a very busy schedule. There are plenty of blogs with free information, tutorials, and templates as well as YouTube channels with valuable information.
Another option is online courses that focus on different aspects of business finances. These can equip you with the knowledge and know-how to stay on top of your company’s financial health and make smart financial decisions.
Review Financial Statements Regularly
One of the most important things you can do to keep an eye on your company’s finances is to regularly review your financial statements. The four main financial statements include: the balance sheet, income statement, statement of cash flows, and statement of shareholders’ equity.
While reviewing financial statements once a month is helpful, looking them over weekly can allow you to keep a closer eye on what’s going on and put a stop to any errors or adjust strategies as quickly as possible. Keep in mind that the longer a financial issue is allowed to persist, the worse the effect it can have on your business.
Get Professional Help
If you simply don’t have the time or patience for financial management, you may want to consider getting professional help. Whether it’s bringing on an in-house accounting team or signing up for wealth management services, your business needs structure when it comes to finances.
Whichever route you choose to go, ensure that you take the proper steps in vetting anyone who is going to be handling sensitive financial information. From reading reviews and confirming credentials to running a background check, make sure that you can trust who you’re turning over your financial well-being to.
Keep Personal & Business Finances Separate
If you aren’t already, you need to keep your personal and business finances separate by opening individual checking and savings accounts. This separation will make it easier for you to track revenue and expenditures, as well as identify any red flags more quickly. If you have all of your finances in the same account, you run the risk of overspending, incorrectly classifying business expenses, and running into trouble during tax season.
Schedule Time for Financial Tasks
Reviewing finances, creating budgets, and bookkeeping aren’t exactly the most exciting aspects of business management. To help you ensure that you stay on top of your financial responsibilities, schedule in time to take care of these tasks. That way when it comes time to do them, you’re less likely to brush them off.
You can create a recurring task in your project management software or even just your Google calendar, so you can get reminders that these duties need to be taken care of before the end of the day, week, or month. Even though you might not look forward to them, you’ll be thankful that you carved out enough time to do them instead of rushing to do everything on the last evening of the month.
Plus, this way, you’ll be more focused and in the right mindset to pay the necessary attention and care to doing financial tasks correctly.
Whether you’re just starting your own business or are running into some financial problems, having tactics for managing the financial health of your company can only benefit you. Incorporate these tips into your business management strategy and you’ll be on a path to better financial well-being.