Ultimately business owners want to earn more and spend less to maximize their business profit. This is achievable if you know how to handle your finances and follow these simple tips.
1. Be honest and realistic when analysing your finances
Examine the funds in your business closely. Do you have enough money to sustain your operations for the next 3 or 6 months or the whole year? What is the status of your cashflow? Is money regularly coming in? Are you aware of your outgoings? Last year or in past years, were you spending more and gaining less?
Answer these questions as honestly as possible without any bias. Then, analyse your business finances. If you are spending more and gaining less, admit it. Be realistic about your finances. Track down the problems. And once you do, focus on how to solve them.
If your business expenses are increasing, maybe it is time to cut things that are unnecessary or think of more ways to gain or attract more clients or customers. Or sell more to your current clients or customers.
2. Avoid making illogical decisions
People sometimes have the tendency to rationalise illogical decisions. According to studies, if we think that Plans A and B are good plans, we make up convenient "facts" to back up these plans neglecting all the other things that make these plans bad. We have an innate bias to things that we think are good decisions.
Being biased and illogical are not good things when it comes to dealing with your finances. Thus, to know if your plans or decisions are logical or rational, you need to ask for advice or consult an expert instead of assuming or relying on the "facts" that you may have conveniently created.
As a trusted business advisor and chartered accountant in Auckland, we talk one on one with our clients and help them to create effective business and financial plans Our clients can talk with us anytime they need assistance.
3. Settle debts with HIGH interest
Loans are good to help you get started. But debts with high interest are like an anchor that will drag you and your business down.
If you have debt, repay the debt with the highest interest first and make sure to make it a priority
4. Think of other ways to generate more money
The best way to get more money is to create another source. Why not think of expanding your business? Or adding more products and services? Or creating a new business venture?
When clients think of expanding or adding more services or products to their current business, they call us and talk to us about their plans. As their trusted business advisor, we help them with business planning and assist them every step of the way to make sure that they are making the right decisions.
5. Record, record, record
Record your finances. Record everything. Keeping records will help you effectively manage your finances. It can also make your life easier when it comes to handling your annual accounts, tax returns and GST, among others.
Many business people ask their accountant to do their business book keeping for them As a dedicated chartered accountant in Auckland, we have a team of accountants who are ready to assist you manage your financial records. We use the best accounting software in NZ to ensure that your records are accurate and up to date.
Contrary to popular belief that managing finances is a nuisance, it is actually quite straightforward when you have a plan and an expert partner to help you.
More than just an accounting firm in Auckland, at Paul Martin Chartered Accountant we have helped many business owners to create their business strategy and help them stay on track with their business financial goals.
If you want to get started sorting your business finances, please request an online appointment or call us on (09) 576 4166.