Running a successful business is about more than your product and marketing. Keeping a handle on your finances will also make it easier to reach your business goals.
Many business owners set ambitious goals for their companies, whether it’s wanting to help solve a global issue such as climate change, make their first million or create a business that works around family. These goals can can help to keep both you and any employees motivated as you create a great product or service and then take it out into the market. However, managing the financial side of the business is equally important in helping you achieve what you set out to do.
Whatever your business goal, here are ways to look at money management to help you succeed in the long term.
1. Identify key metrics – and measure them
The first step is to have measurable goals that you monitor regularly. Key metrics may vary depending on the business.
For example, the metrics relevant to a subscription-based service would include the number of subscribers (is it up, down or flat?) as well as the financials (what is the bottom line year over year? Is your revenue up or down?). For a retail business, it could include like-for-like sales (are this season’s numbers up compared to the same time last year?) or traffic numbers to a website or store.
No matter what the particular metrics, a dashboard to help monitor them is helpful to any business. There are lots of digital tools and apps to help you do that. Or, you can develop your own dashboard using a basic Excel spreadsheet. Whichever you choose, keep it simple so you'll be more likely to use it.
2. Get a handle on your numbers
One of the obstacles to meeting your business goals can be a lack of insight into the business. Traditional accounting systems can be backward-looking and don't always offer the level of granularity you need. Maintaining your balance sheet will go a long way in helping you keep track of your numbers. Plenty of new financial tools can help too, allowing you to tag different revenue streams and where your greatest costs lie for a more detailed view of where you stand.
Getting a handle on your numbers can help you identify which activities are contributing most to the bottom line – and how to optimise the mix.
Put time aside to look through your numbers so that you keep on top of your bookkeeping. Treat that time just as you would an important meeting. Make it a fixed appointment in your calendar that cannot be changed. You could even give it a catchy title such as “Money Mondays" if that helps you form the habit of a regular look at your finances.
3. Focus on the bottom line
That level of financial insight can guide strategy and decision-making. Some business owners find they are spending time on activities that contribute very little to the bottom line. If that’s the case, you may want to shift your focus onto business functions that can boost your revenues instead, or work out how you can make what you do more cost-effective. Our year-round guide to cutting business expenses might be able to help.
Changing how you invest into your business may be a tough call to make, but knowing your numbers can help to remove the emotion from your business decisions, especially if you've been sidetracked away from meeting your business goals.
4. Don't be afraid to enlist help
Running a small business is demanding. Business owners are typically pulled into a lot of different directions when starting out and growing. At times, it's worth taking a moment to remember what it is you're good at and considering additional help. Otherwise, you may find it hard to maintain the energy and motivation you need for the longer term.
Keep track of everything you do for your business over one week. Then, go through and highlight the things that only you can do. Also, highlight the things you spend time on that don’t have to be done by you. That way you can figure out which things you’ve simply got into the habit of doing, but which do not add value.
Outsource or delegate the rest. Business owners often think they can't afford help, but these days there are many work-for-hire sites in the UK, from Worksome to Upwork.
Seeking outside advice can help you get some perspective. Read our guide on how small business owners can benefit from mentors and the different ways you can go about finding one, from non-profits or online matching platforms.
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