Remember your very first paycheck many years ago? Whether you were working part-time on a paper route or as a babysitter or whatever job you had, we all remember sorting out our money down to the last penny so we could be sure we were making the most of it.
Times change very quickly and, especially in this day and age, money management can be extremely difficult and long-winded. However, in the business world, this skill has never been more important, even more so if you’re in charge of business finances, budgets or managing a team. To give you everything you need to know, here are ten tips to optimising your finances.
The only way you can effectively manage your money is by getting organized and getting everything down on paper (or screen). This also means setting goals within certain time frames so you can monitor and track your progress. The best way to approach this is by setting short-term, mid-term and long-term goals.
Work Out Your Non-Essential Spending
As a business, once you start taking a real in-depth look at your finances, it’s easy to start spotting areas of your spending where you might be able to cut back. For example, are you buying in stationery that you don’t really need? Are you spending money on certain projects or expenses that could be cut back on? This will vary from business to business so have a look and see where you can make savings.
Automate Your Transactions
If you’re paying back company credit cards, supplier fees or bank loans, it pays to set up these payments automatically, so you never miss a payment. Mispayment charges can be extremely and unfairly expensive so ensure that you never miss them.
Chet M. Campbell, the financial manager for Top Canadian Writers, shares his story;
“As an online service that operated across Canada, we had a tonne of money coming in and out of our accounts every single hour of every single day. The only way we could manage these transactions efficiently was by automating every transaction we could to writers, customers and banks, enabling us to concentrate and accurately monitor everything.”
This may seem obvious but budgeting yourself on a monthly basis is a great way to manage your finances. As a rule of thumb. Try to give every dollar you have a task. Whether it’s paying bills, purchasing new equipment, going into a savings account or paying wages, give every single cent a job and you’ll know exactly where everything is going.
Say you’re kitting out your office or looking for new materials to use in your business, could you find them cheaper elsewhere. You may be using a supplier you’ve used for years, but it always pays to shop around to see if you’re getting the best deal, saving you money in both the long and short-term.
Resist Impulse Buying
It may be incredibly tempting to purchase the new designer smartphone or computers to operate your business or a comfortable reclining chair for your office but are they really all necessary. Especially during your first few years of operation, it’s vital that you watch the pennies and build up your savings before you start splashing out.
Laura Humphries, the financial writer for Best Australian Writers, explains;
“One of the biggest tips I have to share with my clients is to resist the urge to splash out. When you’ve come into a large sum of money or your business is doing well, it’s easy to spend the money outright. One of the biggest clients I would have is people who have just received a refund on a large purchase and would instantly want to spend the money again. Instead, save it for something you really want.”
Implement Your Strategies
It’s all well and good writing up your initial plans and filling out tables on a spreadsheet, but if you don’t stick to your plans, you’re going to fall off the track instantly. Set aside time every day or once a week to dedicate to organizing your finances, ensuring you’ve got the best chance of staying on track and reaching whatever goals you set.
Being Flexible When You Need to Be
The thing about sticking to plans is as soon as you’ve made one at it’s been going well for a few weeks, you could bet that something will happen that will cause large and rather unexpected expenses. Be flexible with your spending and understand when a good time to pay out for these expenses are and when they are not. Seasonal times are a big one to consider.
Academic writing companies as featured by Huffington Post, have business models that need to be extremely flexible as the rate of pay, income and outgoings can completely change over the course of the day. The same should be applied to your business. Expected things can happen completely out of the blue so always be prepared to take a smart approach to dealing with them.
Look to the Future
If you’re saving money or you’re investing in something, understand that you’re planning for your future. These are thoughts that can be filled with excitement, but you want to ensure that you’re always on track. If something doesn’t add up or seem right, or you’ve simply budgeted wrong somewhere along the line, correct it while you’ve got the time. Always ensure that you’re fair with yourself.
Be Responsible with Credit
This applies to business owners as much as it does individuals. Credit is a great way of affording opportunities that we might not be able to afford in the present. Although this may seem like an appealing offer, always remember to be responsible and always to read the small print.
Check the interest rates and what you’ll repayments will be. If monthly payments get too much, you can so easily find yourself struggling to pay back the money.