Whatever the aims and goals of small businesses and freelancers, turnover and profitability are usually top of the agenda. Keeping an eye on the finances is what keeps the business going. Like many people, numbers may not be your strength, which is where accountancy support is invaluable.
We have a few tips to help you improve your financial performance, so you can worry less about ‘boring’ figures and more about running your business.
Efficient accounting processes
Don’t waste time using out of date systems or processes. Using a software package like Xero means you can integrate with other software systems, keep up-to-date with your accounts on-the-go and manage credit control. Plus, it is free with our accounting package.
It not only saves you time, so you can focus on the business, it also means you are dealing with accurate and “real-time” information, which greatly aids decision making.
Know your key performance indicators (KPIs)
It makes good business sense to set financial targets for the week, month and year.
One vital area to monitor is cash flow, where your KPIs could be around credit control and receiving payment for invoices, as well as paying suppliers in a timely fashion.
As well as cash flow, most small business owners want to carefully track current sales and sales in the pipeline.
Having a dashboard of your KPIs, helps you quickly understand if there is enough money coming into the business as well as how your business is performing, financially.
Planning and objectives
Whether it’s a long term or short term business plan, knowing what you need to be doing now, and what you are working towards will help with your financial performance.
Your objectives could be around growth, sales, or even how to make the same amount of money while reducing your time spent working.
Know your business limitations
Be realistic in everything you do. This includes how you monitor your availability, your stock and timescales to complete your service, or make your product. Check all these against objectives and actual numbers on a regular basis to get an idea of how your business is really doing.
There is no point in over committing to a tight schedule if you can’t deliver, or bulk buying your own supplies if your order quantities are small.
Work with professionals
It’s fine when you get started with a small business to be using spreadsheets and filing your own tax return. However, as your business takes off you don’t want to be spending your time trying to figure out accountancy and tax jargon.
You will be saving yourself time, stress and money by partnering with a professional to get your accounts up to scratch and find your tax efficiencies.