First things first: make sure you understand your business’s cash flow– that is, how much capital your business is receiving (for instance, through payment for sales or services), and how much it’s spending.
Lacking visibility of this can be incredibly risky. It’ll leave you in the dark as to the money you’re making and expending, which can mean trouble if your outgoings begin to outweigh your income. And you’ll be unable to set reliable targets for your business’s growth, meaning that successes won’t be fully capitalised upon and chances for long term development wasted.
To start getting a handle on your business’s cash flow, set up a spreadsheet detailing all of your monthly and annual income and expenses in a clearly understandable way. Don’t try to be too clever or feel that just because it’s important, it needs to be difficult; the more intelligible and intuitive it is, the easier you’ll be able to keep on top of your liquidity. It means you can set feasible income targets to ensure not only that all expenses are covered, but that you’re making profit on top of them. You’re also able to gain insights like year-on-year revenue changes or even month-on-month, keeping you in prime position to set growth targets for your business’s development.
We’re sure there’re few entrepreneurs today who consider tackling piles of paperwork and thrashing through filing the most exciting part of their line of work. However, filing paperwork properly is up there with the most important duties a flourishing business needs – and for several reasons.
For starters, you’re legally required to keep hold of important documents, and present them upon request. That’s irrespective of whether you’re a self-employed business owner or a limited company. Penalties for failing to show important documentation when it’s asked for are highly serious, and can include fines of thousands of pounds or even the disqualification of company directors.
Simultaneously, if you’re surrounded by receipts and invoices that are unpaired with particular costs, then there’s little chance you can know how much your company is making – or losing. A mountain of papers is a sign that you’re not as on top of things as you need to be in order for your business to shine, and there’s never been a better time to start making a change than now!
To become a paperwork pro, organise your filing by year, followed by dividers to keep documents either grouped together or separated. Below is an example of how your paperwork could be separated, which will allow you to easily locate documents if needed, and store them in a logical and manageable way:
Some of us may think that we’re able to navigate complicated bank accounts blending our personal wealth with our business capital. However, all it takes is for one particularly stressful period, and you might completely lose your grip on your liquidity, which can become a substantial problem, and is one that’s so easily avoidable!
As such, it’s important to keep your business and personal finances completely separate. This can be achieved by simply paying for any business transactions with the company’s finances, while using a personal card purely for personal purchases.
In any circumstances where you may need to transfer personal funds to your business, or vice versa, it’s also essential to process the transaction with all the appropriate formalities and relevant paperwork. This will ensure the transaction can be tracked properly within your own understanding of your business’s finance, and won’t leave strange black holes in your accounts that could cause confusion in the future.
When setting up your business it’s tricky to determine the price you should charge. Charging too little can lead to losses, or at least limit your prospects for growth at a time when growth is high on the agenda. Charge too much, however, and you risk dissuading potential customers and failing to attract interest.
To ensure your business maintains customer interest by delivered goods or services at desirable rates, it’s important to regularly compare your prices with direct competitors – and to have a thorough understanding of who your competitors are, both locally and on a larger scale. There are many ways you could do this, such as a simple Google search to see who else is offering a similar service or product in your area, and then comparing your own prices with theirs.
Additionally, continually re-evaluate the products you’re acquiring and selling. If something isn’t performing or driving the interest you anticipated, then be sure to note learnings and apply them to your strategy moving forward. Making mistakes isn’t an issue so long as you recognise what could have been improved upon, and implement it in the future!
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