Small business owners wear many hats to keep the business operating. They find their customers, deliver product and/or services promised, keep cash flowing and stay in out of trouble by following the law as best they can. A good balance between those challenges makes a healthy business. Most business owners dread the accounting & tax side of the business. However, with just a little time set aside each week, they can conquer it and improve their financial results! So how do small business owners keep being financially successful? The key is finding the habits that work for you.
Here are some healthy habits that I do and have found provide great financial results consistently.
- Set aside time each week to work on the business. Plan to make your job easier. Sit back, review, evaluate and improve your system to get better results.
- Monitor weekly. Determine what activity would create success, measure and monitor. This would activities such as cash collected, time on customer/clients, products sent, orders taken, backlog, prospect follow up, etc. Consider 3 key actions that will improve your bottom line. He activities change as your business change. Only monitor 3, more that that and it is easy to get overwhelmed.
- Know your numbers – Three key numbers – gross margin, overhead and your break-even sales. Know who your top customers and the product or service that adds most to your gross margin. Measure them monthly to keep them from negatively changing.
- Choose your customers wisely. Clarify your ideal client – the one that values what you do, can afford and do pay the most and pay it on time. Make it easy for them to work with you. Match your values. Grade the clients. Keep the best and drop or create a plan to make the client better.
- Choose the product or service you promote wisely. Focus on your money maker. Work to lower the costs. Say no to the type of work you don’t do well.
- Money management pay yourself a fair wage, save for taxes and save for emergencies. This will reduce your stress and allow you to make good decisions.
- Invoice customers at the time of highest value to your customer. It could be at the time they commit or the time they receive it. This is the time of least resistance collecting. Never delay billing.
- Review the business bank and credit card activity- online or hard copy. Review who they are written to – the checks, ach or credit charges. Do you know them and what is being purchased? Anything that is not yours? Are there any subscriptions that you don’t use anymore?
- Pay bills once or twice a month. Be efficient! Spend the least amount of time possible paying your bills. It doesn’t increase your bottom line.
- Keep your financial records up to date. You can’t change history. Learn from the past but focus on future.
Financial health doesn’t happen overnight. Just like daily exercise and good eating habits your success will improve as your habits improve.
By Mary Guldan-Lindstrom, CPA