6 Steps to Ensure That Your Business is Financially Fit and Healthy
As a business owner, you are probably always looking for ways to increase revenue. But what about ensuring that your company is financially fit and healthy?
While it may seem like the two are mutually exclusive, they are not.
In this post we'll share six simple tips that will help ensure that your company is in tip-top financial shape.
#1 - Set a Goal
Ask any personal trainer if it's a good idea to set fitness goals and they'll respond with an emphatic "yes!"
The same rings true for your business' financial fitness. Setting goals is a great way to ensure that you're on track for success.
In fact the G in our GROUNDED acronym, you guessed it stands for GOALS (we use GROUNDED to guide our client onboarding journey).
Remember that your goals should be SMART: Specific, Measurable, Achievable, Relevant and Time-based.
For example:
Reduce expenses by 5% by the end of Q1
Set aside enough capital to open a second location within three years
Hire a full-time marketing manager by the end of Q3
#2 - Create a Plan to Achieve Your Goals
Once you've set your goals, it's time to create a plan for achieving them.
If your goal is to reduce expenses by five percent by the end of Q1, then list ideas for areas that could be looked at for improvement and identify potential reductions or create more efficiency.
For example:
Reduce postage expenditure by implementing an online postage system
Implement a more efficient way to track stock
Create new systems to increase productivity
Increase hybrid working hours
Relocate to a smaller office space
Remember initially this is just an ideas list, so go wild. You can then work back through and hone it to quick wins, mid wins and longer-term plans.
#3 - Track Your Data
I can’t emphasise enough just how beneficial tracking your data is to you as a business. It’s like having a magic key given to you that unlocks secrets about your business you just couldn’t see otherwise.
If you take nothing else from this post – please begin to track data – just pick one or two things and start to log it on a spreadsheet (or just use a notebook if nothing else!). It could be sales, it could be leads, it could be new clients – use whatever feels relevant or what you want to focus on and just begin – weekly or monthly whatever fits.
#4 - Prioritise Cash Flow
Cash flow is one of the most important aspects of a healthy business. If you don't have enough cash to pay your employees, suppliers and other bills then it doesn't matter how much revenue you're bringing in (or how profitable you are – yes you can have a profitable business that struggles with cash flow). You will struggle to make your business a success.
Therefore, cash flow is central to the financial health of your business.
Keep on top of your cash flow by using a tool like Float.
Float lets you manage your cash flow to ensure that bills are paid on time and you're always aware of how much money is coming in, going out and whether or not there's a surplus or deficit.
We also have a handy cash flow guide which you can download here.
#5 - Hire a Consultant/Advisor/Accountant
A great consultant/advisor/accountant will allow you to tackle the particular problems and pitfalls of your industry using a proven method for success. They will point out where there is room for improvement and identify opportunities for growth that you may have missed. Furthermore, they will coach you through the implementation of these strategies and keep you accountable, ensuring that your goals will be met.
#6 - Create a Culture That Fosters Financial Awareness
Finally, in order to ensure that your company is financially fit and healthy it's important to create a culture where employees are actively engaged in improving financial performance. This can easily be done with team-building exercises, like brainstorming new ways to decrease expenses or increasing profits.
Hire employees who are enthusiastic about improving the financial performance of your company by providing them with training and access to cloud accounting software so that they can monitor their daily tasks for possible improvements.
Don't wait until hard times start - be proactive about your company's financial fitness. Track your data, prioritise cash flow and hire a consultant/advisor/accountant so that you can avoid paying late fees. Finally, create an environment where employees are actively engaged in improving the financial performance of their company. With these six simple steps, any small business can get itself into great financial shape.
