With limited budgets and manpower, many small businesses often struggle to plan their finances effectively. For almost all of them, the entire process is overwhelming. It’s enough to make them stick their heads in the sand and hope for the best.
And as we know, hope has never been a very good strategy.
It doesn’t help that there’s this common misunderstanding that business financial planning has to be super complicated. And to make matters worse, the traditional accounting world hasn’t always been the most welcoming to small businesses. They’ve often made it seem like you need a PhD in finance just to balance your books!
Effective business planning for small businesses doesn’t have to be rocket science. In fact, it’s often the simple, strategic steps that make the biggest impact.
Talk to your accountant regularly
I wish I was stating the obvious here, but it appears many small business owners could benefit from a gentle reminder: talk to your accountant more than once a year.
Not just at tax time or when BAS (Business Activity Statement) is due, but consistently throughout the year.
People often underestimate just how much value an accountant can bring to the table. By keeping communication open and frequent with your accountant, small businesses can create a solid financial roadmap tailored to their unique needs and goals. This includes developing a comprehensive budget, setting aside funds for tax and BAS, implementing strategies to manage cash flow effectively, and sidestepping potential headaches.
It’s crucial to find an accountant who not only has the expertise but also resonates with the vision and values of the small business owner. If they can’t align with your vision, find someone else.
Surround yourself with the right people
Not all advice is created equal. While input from others can be valuable, it’s essential to discern between constructive feedback and opinions that may undermine progress.
In other words, don’t be put off by comments made by your friend who has never been in business; instead, build a strong, supportive network of mentors, industry experts, and peers who are walking the path too or have been where you are now.
I truly believe who you surround yourself with can change your business. Don’t shave down your big hairy audacious goals to fit someone else’s smaller ambitions.
Set up separate bank accounts to put aside money for tax and BAS
Let’s talk about bank accounts. Yes, accounts, plural, all small businesses should have more than one.
Maintaining separate bank accounts for various purposes, such as taxes, operating expenses, and savings, can help streamline financial management and ensure that funds are allocated appropriately.
This practice not only facilitates better budgeting but also minimises the risk of overspending or encountering cash flow issues.
Find an outlet outside of business
What does rest and rejuvenation have to do with financial management? Well, quite a bit as it turns out. Running a business can be mentally and emotionally taxing, and without taking time for yourself, you risk burnout.
I have seen time and time again that the best business decisions are made with a clear mind.
So go ahead, give yourself permission to rest and recharge. Your business—and your future self—will thank you for it.
See? Financial management doesn’t have to be overly complex or rocket science, does it?
Financial management is all about understanding your numbers, making informed decisions, and having the right support system in place.
By talking to your accountant regularly (book a meeting with them now, ok?), surrounding yourself with the right people, setting up separate bank accounts, and finding time for rest and rejuvenation, you’re setting yourself and your small business up for financial success.
