5 Financial Tips Every Business Owner Needs to Know (Before It's Too Late!)

Friday October 25, 2024

Running a business is like juggling flaming swords—there’s a lot going on, and one wrong move could lead to disaster. But while you’re out there doing your thing—creating, innovating, and making those big deals—it’s easy to let your finances slip into the background. Trust me, you’re not alone. Managing the money side of things can feel overwhelming, but don’t worry! I’m here to share five financial tips that will keep you from losing sleep (or worse—your business).

Tip 1: Cash Flow is King (Don’t Ignore It!)

You’ve probably heard this a million times, but it bears repeating: cash flow is everything. It’s one thing to look at your bank account and think, "Hey, we’re doing great!" but it’s another thing to actually know what money’s coming in and going out over the next few months.

Cash flow is the lifeblood of your business. Without it, you’ll end up relying on credit or scrambling to pay bills. Track it closely! Keep an eye on your incoming payments and outgoing expenses, and plan for the future. This is where a solid budget comes in handy—yes, the dreaded B-word. But trust me, knowing where your money is going and where it will be in three months is much better than crossing your fingers and hoping for the best.

Pro Tip: Get ahead of late payments from clients by setting clear payment terms and following up politely but firmly. If clients are routinely slow to pay, it’s time for a heart-to-heart (or maybe a late fee).

Tip 2: Separate Business and Personal Finances (Seriously, Do This Now!)

If you’ve been mixing your personal and business finances, stop. Right. Now.

Not separating your finances is like putting ketchup on everything—you might get away with it for a while, but sooner or later, things are going to get messy. Mixing business and personal finances leads to confusion, potential tax issues, and it makes it harder to see your business’s true financial picture.

Open a separate business bank account and get a business credit card. Keep your business expenses on one side and your personal ones on the other. It’ll save you (and your accountant) a lot of headaches later.

Pro Tip: Use bookkeeping software to keep things clean from the start. You'll thank yourself during tax season!

Tip 3: Don’t Skimp on the Emergency Fund (Yes, Your Business Needs One Too)

Just like you (hopefully) have an emergency fund for your personal life, your business needs one too. Unexpected expenses happen—a key piece of equipment breaks, a big client delays payment, or a global pandemic hits (remember that one?). Without a cushion, your business could be one unlucky event away from a major crisis.

Set aside some of your profits each month to build up a safety net. Ideally, aim for at least three to six months’ worth of operating expenses. It’ll give you peace of mind and keep your business afloat when the unexpected happens.

Pro Tip: Consider automating these savings—set a portion of your revenue to automatically go into a separate account each month. That way, you’re not tempted to spend it.

Tip 4: Stay on Top of Your Books (Even If You Hate Doing It)

Let’s be honest—keeping your books up to date probably isn’t the highlight of your week. But ignoring them? That’s like driving with your eyes closed and hoping for the best. You need to know what’s going on in your business financially.

Stay organized by keeping your books up to date, reviewing them regularly, and reconciling them with your bank account. This will help you catch any discrepancies early, avoid cash flow problems, and keep your business running smoothly.

Pro Tip: If bookkeeping really isn’t your thing, outsource it! (Spoiler alert: I happen to know a great bookkeeper 😉). Whether you do it yourself or hand it off, make sure it’s being done regularly—your future self will thank you.

Tip 5: Know Your Numbers (So You Can Grow)

If there’s one thing successful business owners have in common, it’s that they know their numbers. This means more than just glancing at your bank balance—it’s about understanding your key financial metrics. What are your profit margins? How much does it cost to acquire a new customer? What’s your break-even point?

Knowing these numbers will help you make smarter decisions. Whether you’re thinking about expanding, hiring, or launching a new product, you’ll be able to make those choices based on solid data, not just a hunch.

Pro Tip: Regularly review your financial reports. If you’re not sure what to look for, don’t be afraid to ask for help. Knowing your numbers is empowering—and it’s the key to sustainable growth.

Bonus Tip: Don’t Be Afraid to Ask for Help

Here’s the truth: you don’t have to do it all on your own. Running a business is hard enough without trying to be a financial expert, too. Whether it’s hiring a bookkeeper (hint, hint), working with an accountant, or using financial tools, don’t hesitate to ask for help.

There’s no shame in outsourcing or seeking advice when you need it. In fact, it frees you up to focus on what you do best—growing your business.

Running a business is no easy feat, but with a little financial savvy and a few good habits, you can set yourself up for success. Take control of your cash flow, stay organized, and don’t be afraid to get help when you need it. After all, you didn’t start your business to spend all day buried in numbers—that’s where I come in!

Need help getting your finances in order? Let me take the stress off your plate, so you can focus on what you do best. Reach out today, and let’s make sure your business is financially fit for the future!