If money is the heart of every business, then financial management is the heartbeat.
No matter how many great ideas you have and how much creativity you put into developing your product or service, a business must turn a profit in order to continue growing. The more money it makes, the better products it can develop, the more markets it can promote to, and the more assets it can gain.
The old view of managing business finances says use of money should be reactive and avoid any risk. This means that money is to be maintained, sometimes without keeping an eye on the overall big picture. The new view of managing business finances says use of money is vision-focused, growth-sustained, and unafraid to take risks. This allows businesses to chart a path for product or service engagement alongside funding.
In order to stay in business, it is imperative that business owners master financial management. Here are six stages to handling money smartly:
Claiming your most valuable asset
The most valuable asset is time and poor time management can mean wasted money. Therefore, making a list of tasks, focusing on what’s important, doing what you can, delegating what you can’t, and deferring some things until later are important steps to take in the process.
Setting measurable targets for your teams(s)
As companies grow, so does the workload and so do the number of employees there are to manage. Setting SMARTER (specific, measurable, attainable, realistic, time-framed, evaluate, and re-do) business goals can help keep each area of the business running smoothly without the owner or CEO getting bogged down with all the details.
Paying your employees and suppliers on time, every time
Employees and suppliers work hard to ensure your business is running well. The very best you can do is make sure their paychecks are processed on time. Knowing deadlines, being aware of compliance, and treating suppliers and employees as you’d like to be treated can go a long way.
Mastering your business’s cash flow (once and for all)
Money can go just as fast as it comes if you don’t watch the cashflow. This may mean being in contact with the person who contracted your business, dealing with accounting departments, and creating a forecast for the next 6 months and full year.
Managing your finances on the move
Spreadsheets and the cloud are two of your best friends when it comes to managing money on the go. It is simple to track sales and expenses with spreadsheets and the cloud makes all this data accessible to you wherever you are.
Using reliable financial insight to accelerate growth
The 80/20 rule states that 80% of your sales will come from 20% of your customers. So, it makes sense to use financial reports to identify those customers who will help your company turn a profit the faster.