Smart Money Tips for Businesses
Ever wondered how you can essentially ‘get more’ out of your business?
Well, it starts with smarter money management – an area of business many aren’t particularly comfortable with.
A strong financial house is the key to running hiccup-free operations and leading a team assertively and efficiently towards expansion possibilities, most of it being guided by simply saving where you can.
Let’s look at our eight best tips for keeping business finances in top shape for another year.
Prioritise budget revamps
Dissecting your expense account to truly see where your money is going is probably the most important tip on our list to ponder.
Ensuring you're spending with purpose eliminates the need to catch up on months’ worth of expenses during your regular bi-yearly budget revisit.
The point is that circumstances can, and do change at the drop of a hat, meaning monitoring your cashflow situation and recognising what to spend money on and when is a must-have trait to remain on the front foot.
Also, planning ahead allows you to have cash ready should slower times arise. If you know you’ll need to fork out big dollars shortly, maybe looking into setting up another bank account to start saving for this outlay would be worthwhile. We focus on this and other expenditure saving options with the Profit First Cash Management system.
Banish the business credit cards
Be extra wary of the purchases you're putting on your plastic. Reducing credit card use for minor, everyday purchases helps break bad spending habits while shifting your mentality more towards purchasing with purpose.
While business credit cards can be handy at times, you'd be surprised how fast debts rack up paying for most things mindlessly.
Start a 'Rainy Day' fund
Being ahead of the eight-ball by saving some side cash is one of the most financially powerful moves you can make as a business owner. Your Profit Account can be leveraged as the base for this fund.
The freedom and flexibility of having emergency funds provides you with the levels of confidence and motivation required to make high-risk moves for bettering your business.
It’s a worthwhile investment to speak to your Profit First Advisor how the best way to leverage this.
Voluntarily bump up your super
If you're new to working for yourself, you'll likely be a stranger to having to pay your own super. Setting up a suitable plan ensuring you continue to contribute to your super fund is crucial, and even better if you can make voluntary contributions. This can be paid from your Owner’s Pay account to keep it separate from the business operating expenses.
From year to year, the government may even offer to match your contributions or pay into your fund as a bonus depending on your own deposits.
Deal with debt first
Although your debts might be to thank for why your business is currently thriving, it's important to focus on getting them under control sooner rather than later.
Paying down business loans early can allow you to avoid years of covering accumulative interest. There's never been a better feeling as a business owner than when you see loan accounts reach zero and you can start investing back into what you’ve built again.
With Profit First, we utilise some of the quarterly profit distribution to help with paying down debt. Speak with us today to find out how.
Shop around
Another smart money tip, especially for new businesses, is to do your homework before signing any contracts regarding those unavoidable recurring expenses.
You can generally save a bit of cash through researching and taking advantage of discounts, deals and promotions for things like utilities, internet and even equipment hire.
Exuberant marketing and advertising services is usually one good place to start for fairer, money-saving offers. Overhauling your marketing strategies by cancelling expensive packages that aren’t worth the premium can see you saving in the hundreds, if not thousands!
While most people starting out opt for what's reputable, you'll tend to see decade-long ventures developing through multiple means of cutting costs.
Proactively keep track of everything
All aspects of bookkeeping and record keeping need to be followed rigorously as a business owner. Retaining receipts, organising expense accounts, managing cash flow and a whole range of other financial planning practices should be part of a weekly routine at a minimum.
This ensures you have the ability to refer back to a particular account, project or sale in a more organised manner. Also, it makes your life that little bit easier come tax time.
Increase your prices appropriately
Keeping your prices steady long-term really only limits opportunities for your business to expand. A polite email to your existing customers notifying them of price increases with an explanation of the decision is usually enough for your client base to understand and want to retain their relationships.
Try to align this with the beginning of every financial year or ideally in January for a more seamless process for both you and your clients.
Explore alternate hiring methods
For some business models, hiring traditional employees might not be best-suited to the nature of your operations.
Oftentimes the costs associated with taking on new workers can far outweigh the benefits. This might mean you may have to take a new approach to hiring new staff that you never have before such as sourcing contractors or freelancers.
This can save you valuable dollars on paying employees super and other costs such as insurance. Remember your tax obligations might also change come July 1, which could be something to consider and whether it benefits your business specifically when on-boarding new help.
Looking to learn more about smart money management? Check out our other recent articles including Top Tips for Business Growth helping put small businesses back on the right path!
Contact Ironbark Industries Bookkeeping today to discuss our profit first and bookkeeping services, your specific requirements or any other financial managem
ent enquiries.
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