Are you an entrepreneur who feels intimidated by numbers? Do you often have a feeling of stress or get frustrated when managing the books of your business? Are you currently feeling a little anxiety as it relates to the upcoming tax season? If so, I want you to know that you’re not alone. In fact, most entrepreneurs who do not have a financial background share the same feelings as you. Many also allow those emotional roadblocks to keep them from getting a handle on their business’s finances. But, you’re going to be an exception this year and become a financially savvy entrepreneur! This blog post is going to help you get started right this year! I’m going to share with you 5 simple steps that will help you gain the financial literacy you need for running your business, saving money, and increasing your bottom line. Ok, let’s go!
1.) Change your financial mindset – I know this sounds so cliché, but hear me out. Changing your mind is the first step to becoming an entrepreneur who is financially savvy! Your mindset is half the battle in getting in the know of your business’s finances. The way you think about money and finance actually affects the way you handle the financial affairs of your business. Whatever the emotions or barrier surrounding finances, you must first determine where those feelings originate. Then acknowledge them and take steps to overcome them. First, start with believing within yourself that as an entrepreneur you have the ability to understand the numbers. Realize that as an entrepreneur, you are the steward over your business. As the steward over the gift in which you will serve others, you have the responsibility of growing your business and that starts with knowing the numbers and understanding them.
2.) Prepare for the Tax Season Now – schedule some time to meet with your accountant this month to go over your tax situation. Also use that time for reviewing 2010 financials to determine your taxable income and for creating a tax strategy for next year. But, before you go make sure your financial documents are organized (this will save you money). This simply means to ensure that you have documentation supporting your business income and business expenses.
3.) Get In the Know of the Numbers – there are four basic financial statements that every entrepreneur should know and understand. They are critical to you efficiently running your business. The four statements are balance sheet, income statement, cash flow, and budget. As the owner of your business “you” are responsible for knowing what’s going within your organization. So this year ensure that you always have tabs on how much cash you have in the bank to pay bills, payroll, and other expenses. Also, ensure that you are always aware of what’s coming into the business and what’s going out.
4.) Know Where Your Business is Headed – the best way to do this is to develop a budget that reflects your 2011 goals and objectives. The budget serves as a roadmap for your company and is helpful in making important decisions. Remember that a budget is a living management tool and can be changed. It also needs to be reviewed on a regular basis to ensure that business is going as planned.
5.) Set Up a Financial Management Process – this can be as simple as scheduling a dedicated day and time each week or month set aside for completing financial work. This can include organizing your financial documents (such as receipts, invoices, check stubs, etc.), tracking your income and expenses, and meeting with your finance professional for financial analysis.
Following these simple steps will place you on the road to becoming a financially savvy entrepreneur! If you want a sustainable business with continued success, make the financials a priority this year! You can do it and I’m just an email away if you need help!