Only a few tasks really matter when it comes to your business finances, are you doing them?

 

 

Sometimes when you’ve spent endless hours setting up your business and working super hard to make sales, when it comes to getting your financials sorted you hope hiring a bookkeeper and doing your tax is enough. You’ve ticked that box and can move on with all the many other tasks to complete.

 

But I’m here to tell ya, this is only 1 of 3 important tasks you need to do for robust financials in your business!

 

(Don’t stress, tax and bookkeeping is a great start. But now it’s time to expand your financial horizon.)

 

 

Below are the three main financial tasks I recommend to any friend that’s a business owner that asks me what they should be doing in their business. So here I am sharing them with you also.

 

TASK 1. THE MUST-DOS TASKS

 

The necessary tasks that are generally required by law or the tax office.

So, what does ‘necessary’ look like? Preparation for Business Activity Statements (BAS) or income tax. These must be completed by law.

 

As a friend I’d ask you to consider:

  • Does your business have enough transactions to require a sales tracking system or bookkeeping system? Or is it still small enough that you can keep track of it in a diary or excel spreadsheet.
  • Do you leave everything until the end of the financial year or have systems to complete this throughout the year? This will mean the time spent on business finances is spread out and at tax or BAS time, you’re not trying to do everything over a few days.
  • Do you have systems to automatically complete these tasks, such as electronic invoices? Which items need to processed or filed manually?
  • Can you outsource any of these tasks to save you time?
  • Can your tax accountant recommend any systems or software to save you time?

 

TASK 2. THE REFLECTIVE TASKS

 

These are the steps savvy business owners take to see exactly how things are going. They require you to ‘pause’ and have a look at how the prior month went.

 

For example you might think, “because I did this last time and this was the result, now I want to do this in the future”.

 

Things I would ask you to consider might include:

 

  • how much money was made compared to the same month last year?
  • comparing sales from last month to two months ago
  • did it cost you the same as the month prior to make as much or more money?
  • did expenses increase, and if so, why?
  • are there months of the year that are busier than others?
  • do the seasons or weather affect how much your sell or how many appointments you receive?
  • what did you do differently from one month to the next to cause a change in sales revenue?

 

These questions will make a lot more sense if you start writing down or tracking how much you sell or make in revenue month by month.

 

Below is your exercise to put this into practise – your DOWNLOAD is here

 Step 1.

Use the download or grab a piece of paper and write across the top each month of the year, down the left-hand side of the page write out the categories of products or services you offer.

Step 2.

Beginning from this month (or even the beginning of the year if you’re keen!) add up how much you made each month. Write this against each income category.

 

Fill in a few months and see if you can see any pattern here?

 

This simple reflective exercise for income can become invaluable as your business grows.

 

It can also be replicated for your expenses.

 

List out your expenses categories – these may include direct costs of product, wages, other costs (like office rent, insurances, subscriptions and website expenses).

Step 3.

Add up your expenses for each month and put them in under each category.

Step 4.

Total them at the bottom of the page.

Step 5.

Minus your expenses off your income. This equals profit.

 

Can you see any patterns here?

 

Have a look at the way you keep and store your business receipts and how you track how much money you make. Keep it at hand, in your office or on your phone to make this task quick and easy at the end of each month and it will start to transform how you view your business.

 

TASK 3. TIME TO PLAN

 

This task is usually the one most business owners never quite find the time to do. These are the tasks that you may not see an immediate impact on, but can provide the biggest gains in the long run.

 

All your proactive financial tasks like forecasts/budgets and goal-setting fall in this category.

 

You might recognise these are the ones where you say “I want this result, so now I’m going to do these things.”

 

But the interesting thing I have seen often is, the businesses who make time for planning and being proactive about their financials instead of reactive- THRIVE financially.

 

The investment of a few hours quarterly can make all the difference!

 

What do I mean by proactive planning? It’s kind of like goal setting or estimating what the future may hold. It may not be an exact art but it’s about getting clear on what you think might happen, and then re-jigging things as new information comes to hand.

 

How do you do this?

Set aside a few hours to pull together your financial information as mentioned in task 2. This is the breakdown of money coming and money going out, by category and month.

 

Then you start asking yourself some questions:

  • Do I think that the next 6-12 months are going to look the same as the last 6 months?
  • Do I need to account for anything different?
  • Am I adding any new services or products?
  • Do I need to allow for any extra expenses or wages?
  • Are there any annual bills coming up?
  • How much would I like to make in the next 6-12 months?
  • How much do I need to sell to make that much?

 

 

Putting PLANNING it into practice

Step 1.

Reprint the Income tracker from the downloadable, or grab it HERE if you haven’t downloaded it yet.

Step 2.

List what you think will may happen or what you would like to happen in the next 6-12 months. Estimates are totally ok!

 

Use your REFLECTIVE exercise to show the patterns between months and timing of when expenses come in.

 

These will help with your estimates.

  • Do you order enough product for 3 months and then not have to purchase again till next quarter?
  • Have a look at all the information you hand over to your tax accountant or bookkeeper, is there anything there that you need to add in?
  • When do you make large purchases or make annual payments on insurance or software? Try to include everything that may happen throughout the year.

 

Once this is filled in, sit back and have a look at this. Are you happy with what you see? Is there anything you’d like to change? Do you think you need to make more sales to earn what you would like to earn, or are there any expenses you could reduce?

This is your chance to see the big financial picture!

 

 

BIG PICTURE THINKING

 

Once you have pulled together all this information you should be able to see an estimate for your business earnings for the year, and how much your business will cost to run. The aim of the game is to ensure income is greater than expenses… always!

 

If it’s not, then back to the drawing board to make some changes.

 

How long will this exercise take to do? Well, it depends on your type of business, and how large your business is, but it can be between 2 hours and a day. But the clarity that is gained from seeing it all on a page is priceless.

 

WHY DO ALL THIS?

 

Most business owners only complete the necessary tasks required by tax accountants and bookkeepers, but the next two are completed to benefit the business owner and usually take the back seat when time is tight.

 

THE SUMMARY I’D GIVE MY FRIENDS

 

  • Just doing your tax is not going to cut it!
  • Start by reflecting on the financial position of the business retrospectively.
  • Look back and compare this month to last month and how you have gone for the year so far.
  • Look at this monthly and see what your financial story this is telling about the business.
  • What parts of the business are working or making good money and what parts are feel expensive or not of good use?
  • Start writing your own story – piece together how the next year ahead may be. Use the projected income and expenses to make decisions about the direction of the business. This planning exercise is essentially a simple business budget.

 

 

Ultimately, there are no hard and fast rules on how much time you spend doing these tasks. It all depends on your type of business, the stage of your business and what you need from your business at that time.

 

But either way- we all know that what you focus on grows!

 

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