Are you really on top of your business’s financial management?
Surely one of the major jobs as a business owner is to ensure that your business keeps on course and out of trouble to achieve your financial objectives. With strong financial management in place, a company can confidently build its business and weather the storms when they arise. Without it, businesses become vulnerable to attacks on it from general business conditions, the wrong decisions and unscrupulous employees or business partners.
So here are eight objectives you must set yourself to ensure that the finances of your business are in order:
- Money for starting your business
You need to make sure you have the right amount of money to start your business; you need to have the cash to get the right assets in place to get your business off the ground. A great idea needs to be realised and the monetary requirements understood. Get this clear at the start and you can build the business with confidence. Your business plan needs to be clear how much and when you require this starting capital.
- Making a profit
Sounds ideal – but the best companies make adequate profits on a consistent and predictable basis. With this, businesses are in control and can plan for the future. You need to be confident that you have strong business cases for your ventures and that you know when and how much profit you will make. A strong business case and a good budget and forecasting system will allow you to measure your performance.
- Controlling the cash
We believe that good business manage their cash from profits in such a way that they can keep all their options open. Remember a sale is not a sale until you have a satisfied fully paid up customer willing to buy more and/ or recommend you! You need to keep a constant eye on your debtors and their ability to pay you. Have a good invoice and credit control system in place and remember to control how you pay your creditors!
- Minimise threats of fraud and other losses
Watch out for the bad guys! – they could be poor payers, fraudsters, either internal or external – not everyone is as honest as you, and you need to have systems and controls in place to highlight issues and act fast when you see them. Control of your business assets means that you do not generate waste and there is leakage of the profit you business should be earning.
- Be tax efficient
You need to do this for the business, its owners and it employees – this is not about evasion but efficiency and there is nothing wrong with this objective.
- Understanding the cash needs of your business
You may have great plans ahead, but if you don’t have the cash in place to realise them they are merely dreams. Understand what cash you need for your ventures and how that fits in with your business patterns. A strong understanding of the cash low of your business will prevent you getting into difficulty by overspending at the wrong time, and ensuring that you know when is the best time to move your business forward.
- Keep in good shape and out of trouble
We mean your financial condition here – good cash position, good customers and reliable suppliers and protect your business assets! Always question have I got the right customers and the right products and services to maximise profits and can I improve contracts and services I receive from my suppliers?
- Know what you are worth!
So how do you know what price you are worth if someone wanted to buy your business! What value is your business at the present
Well, do you have the basic skills and knowledge for the financial management of your business?