Making financial decisions is one of the hardest things most business owners have to face, especially if you don’t have an expert in start-up business accounting on board yet. If only there was a financial decision making checklist available that you could follow…like the one written down below, perhaps?
State your goals
Every financial decision you make in your business should help you reach a goal, no matter how small or large. When you set your goals, make sure to think about the long term effects of your investments. You also need to look at your monthly expenditure to determine how much of your budget you can invest in your goals, to ensure your business doesn’t go into liquidation.
Set something aside for a rainy day
Just as you would save some money every month for your emergency fund in your personal life, you should do the same within your business. You never know when you might encounter a financial emergency; whether that be the company car needing a repair or running out of coffee! Sitting with some funds in your savings account (typically around 6 months of business expenses) means that you won’t get caught short when the bills rise up out of the blue.
Ask for help
If you can reasonably afford to hire a professional accountant to help you manage your finances, it’s worth doing so. Aside from being professionals in their field, accountants can also offer valuable business advice, will help you improve your cost efficiency and will manage your business growth sustainably. This means that you will always have someone to run your financial decisions by, who can advise your investments and ensure there’s always some money left over at the end of the month.
Track your results
Even before you hire an accountant, it’s important to keep track of your spending and cash flow. You’ll be more comfortable making financial decisions if you know everything that is going in and coming out of your bank account, especially if you know that some investments have been proven to work before. You’ll also be able to learn from your results and see the times of the year where you need to be more frugal and when you can invest more of your cash into the business.
Review your spending whenever you can
You should review your spending annually, but we understand that when you’re a startup, that’s not possible. The best thing you can do is create a cashflow statement and forecast, which you can then check in quarterly, to ensure everything is still ontrack. This will also help you to comply with relevant tax regulations and filing requirements. You’ll also be giving yourself a huge pat on the back for getting all of your finances in check before it comes time to file your tax return, or end of year rolls around.
Hopefully, these five tips will contribute towards you putting together your own checklist to manage your businesses finances, and aid you when making financial decisions.
