Management of a small company is hard work with a lot of responsibility. Businesszone.co.uk published a few tips how to deal with finances.
1) Know your taxes
Companies often get into tax troubles. Being knowledgeable about what you have to pay and be sure you have budgeted enough to pay it on time.
2) Understand your accounts
After your annual accounts are ready, have your accountant explain the details. Find out whether your business increased profitability, whether you achieved your projected performance and what factors contributed to the improvement or deterioration of your business. Try to learn as much as possible from this information for the future.
3) Future forecast
The starting point for this are the financial figures from the past year.
4) Determine key factors you will monitor
These factors should reflect your performance and progress. They should be measurable, comparable with the previous year and can be used as a prognosis for the next period. Most often key factors are sales, costs and working capital. Financial problems are easily indicated by these factors.
5) Monitor your sales
Find out which products are selling well, who are your best salespeople, which sales channel is the most successful and the effectiveness of your marketing campaign. Compare this data with the previous period and current forecast.
6) Keep costs under the control
Fixed costs like rent, insurance or marketing costs can be easily monitored at regular intervals.
7) Manage your working capital
Create a system of how to deal with debtors. Late payments could hurt your business. Control your stock level. Excessive amounts of money should not be tied up in stock.
The next important factor is a cashflow. Have a picture of your bank balance. You can check it monthly, weekly or even daily. It depends on what you prefer. Predict how your bank balance will be probably change in the next three months.
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