4 Simple Steps to Help You Take Control Over the Finances
Did you know that a large percentage of small businesses fail within the first five years of starting? Did you know that most fail, because of the lack of control over the financials? You’re not alone, if you’re an entrepreneur or solopreneur who does not look at the finances of your business on a regular basis. However, the buck stops here! I am going to share with you four simple steps that will empower you to get in the know and take control of your business!
Change Your Mind
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. You may feel intimidated by numbers because of never receiving formal training in the area of finance. Or, you may get stressed just thinking about reconciling the books or thinking about the tax season. 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.
Obtain Knowledge of Finance
Your business and your clients deserve to have an entrepreneur or consultant who understands the numbers. The more knowledge you obtain the more control you will have in running a successful business. It’s imperative to the financial health and sustainability of your business to receive training in the four basic financial statements (balance sheet, income statement, cash flow, and budget).
Keep Accurate Financial Records
It’s pretty difficult to know what’s going on in your business and adjust accordingly if the financial records aren’t accurate. The key to accurate records is to ensure that you have a chart of accounts set up that reflects your business operations. The chart of accounts is simply a way of categorizing your income and expenses into meaningful and manageable areas in a way that gives you the most insight into your business. For instance, if your business generates revenue in four different ways, then the income side of the chart of accounts will be coded (number systematically) in such a way that each revenue stream can be identified separately. Example: 11000 Membership Sales or 11001 Consulting Services.
Setting up systems or processes for regular input and monitoring of the financials will aid in getting organized. Consider creating and utilizing financial statements and reports. Once those are developed, create a schedule (recommend the same time every week or month) for reviewing and analyzing reports. Also, set aside scheduled time for keying transactions into your accounting system or spreadsheet program and for reconciling any accounts that are directly related to cash (bank account, credit card statements, etc.). In addition, set up a filing and coding system for invoices and receipts.
You will find that following these simple steps will be easy and will help you get in the know about the numbers!
We want to hear from you: What challenges have you faced in your business regarding the financials? How do you feel when it’s time to reconcile your books?
Antonina can assist your organization in pursuing these steps. Send an email to firstname.lastname@example.org for more information.