Small business owners wear many different hats – Finance Manager is just one of them.
Unfortunately, very few of us are experts in finance so when it comes to running a business, a little fiscal know-how can go a long way.
We asked Vanessa Bamford (CA, FTI), Director of Playford-based accounting firm Vision Beyond Business, for some helpful rules to live by for small business operators. She shared her top 6 rules for small business success!
1. Get a good accountant/business consultant
Don’t settle for someone who knows tax and structure, make sure you find someone that speaks your language. You want someone that supports your business journey and adds value along the way. Operating a business can be lonely, so a supportive business partner will be invaluable.
2. Invest in accounting software
Getting a handle on your bookwork is made 100x easier with accounting software. Manage your cash flow effectively by putting in processes for quoting, invoicing, payment of expenses, and debt collection. Doing your books with paper or Excel is fine if your venture is just a hobby, but if you are serious about your direction, you’d be crazy not to automate your processes early. A good software will remove a mountain of unwanted admin and accounts time, and also saves you down the track when you get too busy to put this in place.
3. Know your structure and options for growth
Many people begin their business as a sole trader. While this is an easy and low cost structure, it can be risky. It’s always good to understand your options and identify when it’s time to grow into a structure that will give your assets and business more protection.
4. Don’t spend money unnecessarily
It’s so easy to get caught up with all the bells and whistles that your business might need in the future. Figure out what you need to buy now to get those customers in the door, which is ultimately how your business will get momentum. Evaluate your decision to purchase something before you buy it; it’s too easy to get into cash flow problems by overspending or financing on unnecessary items in the beginning.
5. Save for a rainy day
So many businesses get caught out after the end of the financial year when they complete their tax returns. This is often where a majority of cash flow problems develop, so get into the habit of putting money aside each week or month for tax. Otherwise, it can be a major headache!
6. Know your breakeven point
Your breakeven point is a crucial number that you must know if you are in business. This is the amount of sales your business needs as a minimum to keep the business going. The amount of businesses, both new and old, that don’t know their breakeven point is really surprising. Knowing this number means you have a clear goal to achieve, and you can re-evaluate more regularly if you’re not quite meeting it.
We hope you found these tips useful. Keep an eye on our latest news for more business stories and tips!