Are you a business owner who wants to improve their business? Here are our 3 tried and tested financial tips for small business owners.
When it comes to operating efficiently, it is important to understand where your business stands financially. By educating yourself in bookkeeping, or hiring someone to do it for you, you can easily maintain financial records for your business and better understand where the money comes and goes. While this does sound daunting, we recommend using Xero for your bookkeeping needs. This software is incredibly easy for people to learn the basics of and helps the amount of work that goes into end of year tax. Finally, if your business uses a “Point of Sale” system, it is important to ensure that it has integration with Xero, or your preferred accounting software. By having this organised you will not have the potential error of entering the incorrect information and also avoid double handling data entry.
2.Building your Business
One of the most important things about business, is having a plan. The first step is planning a budget for your business to operate on, this allows you to properly track your spending and create realistic goals. After you have created a budget, you should set yourself a profit target for the year based on your business budget. By having a goal in mind, during the financial year you can track your progress and see what improvements need to be made to reach your goal. And finally, you should set yourself a personal goal, while your business is important you need a personal goal to give you the drive to push forward a successful business. This can be anything from building up enough for a house deposit, purchasing and investment property or being able to take a nice holiday.
One thing people have learned over the course of the pandemic is, nothing is forever. How can we mitigate the risk of owning a business? An important part of business is successfully managing your cash flow, it is important that you have a steady stream of work available for you. To drive a successful business, you need to ensure you keep on top of your invoicing (both out and in) to keep a proper track of where your business stands financially. We also recommend keeping up to date with the Australian Tax Office by ensuring that any outstanding debt is paid out as soon as possible. Finally, it is important for a business to keep an emergency fund, as shown during the pandemic; things can change at the drop of a hat. By having emergency funds, we allow ourselves some additional room in case the business approaches unexpected hardships.
If you need advice around structuring your business, please contact our office on 07 5451 1118.