Like several others, you’ve probably worked out that there can be holes in a business.
The only problem is finding where the holes are. You know these holes are costing you a lot of money.
You may find yourself at a proverbial crossroads.
You can probably identify the substantial business costs. But, you need to ask yourself a few questions:
Are the revenues sufficient enough to support your expenses?
Do you continue on your path and just hope for the best?
Will the money leaking from your balance sheet ultimately destroy all profitability?
There is a way to find the leaks in your business’ finances. The following steps should give you some ideas on how you can get your finances back on track and, prevent a collapse.
Create a sound business Plan
This may sound like a broken record, but if you do not have a clear business plan, you are already setting yourself up for failure.
A business plan could be just a couple pages long that describes what you would like to do and, how you would want to do it.
The important thing is that it will show how much you are willing to spend, how much profit you are planning to make and, how long you plan on surviving before you break even.
A business plan is like a road map not a prediction of the future.
Separate your finances
It doesn’t matter if you are the type of person that runs your business like a real corporation or, if you’re just testing the waters. The last thing you want to do is mix up your personal finances with your business finances.
Follow these tips:
• Use separate PayPal accounts
• Have a separate credit card for business and personal expenses
• If you have bank accounts, have separate ones for business and personal
A general rule of thumb would be to reinvest 75 % of the income back into an advertising campaign for your company. At the start, it could be 100 % because it’s important to get the “new” word out about your business. Without new customers you won’t have new money.
Keep a Record
You have to know where your money is going at all times. To do this, use a simple spreadsheet which will help you keep everything in order. Later on, you might need a little more help from financial professionals. In any case, this is going to keep you on track with spending and will let you know how well the business is doing. Another important issue is to keep track of advertising costs. You need to know if it is effective or not.
Get Organized and Stay the Course
This isn’t just for tax purposes however you need to organise every little thing you do with your company. Nothing will kill a company faster than an owner not knowing what actually pays the bills and who they owe money to. Imagine the possibility that you forget to pay your lease for a few months. That slip up could end up costing you a million dollar business. You should do yourself a huge favour and try organising your business.
If your company isn’t growing, then it’s dying. Unfortunately this is reality when it comes to the business world. This means that you will need to adjust the financial goals for your company to allow for an expansion. Look back at your business plan so you can determine what went well and what didn’t.
Amanda Williams is a freelance writer for AdvanceRemovals.com.au.