With spring turning the corner and summer about to begin, you can actually have some very productive activity in just a few short weeks to work on organizing your small business finances into a coherent structure. Here are a ten ways you can do this in the next few weeks:
1. Balance Checking Accounts
This is the chore that everyone dreads but it probably matters the most. If you simply ignore your financial activity on a regular basis, then the first thing you will lose track of our any checks that have not been cashed or even may have bounced. This is even more of a problem if you still do your balancing manually. Make the process more efficient and let a simple accounting software program do the work for you. That way, you can input any information as the activities occur throughout the day and then with a click of a button at the end of the day, balance your checking account.
2. Upgrade Accounting Software
If the first activity is important, then this second suggestion goes hand in hand with it. Every successful small business has turned to an accounting software and thrown the ledger book and no. 2 pencils away. Software companies will come to your business and evaluate your accounting activities for you and then suggest the best software for your business. They also will routinely come out to your business and upgrade the software for you or send you a package that will give you the directions on how to complete it yourself.
3. Work on That Receivables List
Once that new accounting software is in place, you can begin to input your list of receivables. Very few companies only operate on a cash-only basis. So, as you go client by client, you will be well aware of any outstanding debts that are owed to you. These could possibly be in the thousands of dollars and the reason you are not getting ahead. Then, with the new software in place, you can send out 30,60, or 90-day notices to clients who have not paid in full and let them know that you are on top of your client orders and will take a specific course of action if the payment is not received.
4. Analyze Your Finances
Sit down with your partner or with another individual whom you trust to give you honest advice about your finances including spending habits, business activities, and products and services that you offer that may be costing you money. You can run all of these types of reports from an accounting software program, so make sure you consider one that has these components built in as most do. Then, assess your debt to profit ratio as well as putting any debts aside to call the company you owe and negotiate a payment plan or settlement amount if you find you are in debt over your head and your business may not be able to survive because of it.
5. Consult a Financial Professional
Many small business owners don’t have partners to consult with, and a spouse is too emotionally involved to give the best advice. It may be a good idea to find a professional financial consultant to sit down with you and go through your finances. It could be an actual accountant or even a lawyer with a financial specialty. They know specific laws as well as loopholes in the income tax system and other areas that may help you get money back or be able to wipe away debt that you thought you might never get rid of. You can also meet with them throughout the process, so they can make you aware of any changing tax laws, fees, or will just keep you aware of any situations that may be getting financially unstable again within your business activities that needs to be put in check.
6. Return Any Merchandise for Credit
If you are a small business that operates on the credit system, then you have to take an inventory of your products and assess what may be owed to you. If you have ordered too many of any products and they are just collecting dust in the warehouse, that is money that is just sitting there waiting to be reimbursed to you. At the very least, you may be offered a credit by the manufacturer toward your next shipment of another product that you sell more of than that is sitting on the shelves. So, take the time to assess your overstocked inventory.
7. Cash Flow Inventory
You may have a new accounting software in place by this time, but you still have no idea how much cash on hand you actually have. This is important in case of an emergency where the product is needed yesterday. Possibly something breaks that is needed to keep the business actually producing and you don’t even know if you have enough of a “kitty” fund to fix it. If you know at all times what cash you have readily available, you will make sounder decisions about your small business instead of guessing and putting something on credit to keep the business going and getting more in debt.
8. Be Your Best Bookkeeper
Be your own reminder that you must take stock of your finances on a regular basis. That means that you literally set a date with yourself each month to check the books. Also, this monthly process should become at least a two-hour ritual that is done in exactly the same way each month and you are also checking the same items. This way, nothing ever gets forgotten and surprises you down the road when you least expect an added expenditure or a forgotten debt that is accruing interest.
9. Set New Goals for the Coming Year (fiscal and annual)
Always tell yourself that with every new year, whether you are looking at a fiscal or annual year, it means devising new goals for the business. The spring is actually the best time to set new goals for the coming year. It is either a fiscal year coming to an end, or it is the halfway point to the end of the annual year. You should look at any outstanding or ongoing debts you have and reassess them; possibly, you can get rid of some extra expenditures that you haven’t used as much as you thought you might use them. Every small bit adds up to big savings over a year’s time.
10. Create a Year-End Scenario
Speaking of the end of the year, create a “vision board” of success for your company for the coming year that literally allows you to visual your goals for being a more thriving small business than you could have even imagined. Maybe this means expansion in a specific area that you see the potential for in the coming year. Always assess your small business from the bottom up every year and design a bigger and better small business than the year before.