Controlling your finances may seem a daunting task for some small business managers, but if you follow these 6 simple steps, I can guarantee you will be well on the path of controlling your business finances.
As a small business owner you may have bank accounts, emails and resources shared with your personal ones.
This may work well for a sort time, but eventually issues will occur, including not actually knowing what money the business is making, and if you are even making a profit. Often it will look like a profit, but without the proper financial management, regular reports, and any business analysis you might simply be running a business that you are constantly propping up with your own money, and not making a profit.
These steps are a framework to build a good system for keeping your personal finances under control. A full program, including worksheets and consultations, is available.
6 Steps to Financial Control – Small Business
1a. Review your current financial situation
- Print off all Financial Reports for your business
- Update and print all Accounts Payable, and Accounts Receivable
- Review & list all accounts / Loans / Bills / Debts / Incomes
- Ensure your financial data is integrated & kept in accordance with ATO requirements.
1b. Budget Planner – complete the Budget Planner Spreadsheet
- List ALL actual incomes & expenses on a personal Budget Planner. List exactly what the business needs to pay out every week/month on all fixed costs, and estimate of variable costs and a projection of income based on historical figures.
2. Bank Account Separation
- This is a most important step.
- Your business accounts and finances MUST BE separate from your personal finances – bank accounts, credit cards – everything. no exceptions if you want accurate, legally compiled financial records for your business
- Open separate bank accounts for Trading, GST, Superannuation provision, Savings
a) Trading – all business general income and expenses
b) Tax Provision (GST/PAYG) – Provision for all taxation to be held in a separate account
c) Superannuation – transfer weekly superannuation provision into a separate interest bearing account in preparation for required Superannuation Payments
- Note: If your business cannot maintain the required balances in these accounts you need to review your business operations
3. Automatic Payments
- Establish automatic payments to and from each account to ensure all loan repayments, large payables, utilities and commitments are paid every week.
- Establish automatic payments or a system to transfer the GST and PAYG into the Tax provision account, and superannuation provision into the Superannuation provision account
- Pay yourself a wage!
4. Reduce your Debts
- After identifying all your debts, and setting up payments, what debts can you eliminate, reduce or combine?
- Review suppliers, negotiate preferred supplier arrangements, review staff, review utilities.
- Do you have separate departments? do they share resources? can they be merged?
- Cancel Credit Cards
5. Increase Income
- If your commitments are more than your income, and you have reduced your debt, how can you increase your income?
- Review mark-up / profit margins on every product or service
- Review marketing Schedule
- Review systems and Procedures
- KNOW the difference between income and profit (read a definition)
6. Celebrate & review
- It is important that you celebrate your control.
- Review your income, expenses, bills, and savings every 3-6 months & adjust where needed.
Contact A Girl Friday for the full comprehensive 6 step business plan, worksheets, and one-on-one consultation.