Most business owners face challenges managing their finances either because they have a poor grip of financial management or are too busy to monitor and control accounts. Basically, accounting involves processing, summarising, analysing, and recording financial transactions in line with business practices and regulatory requirements. This is not a simple task for someone who is involved in other daily activities like marketing, managing staff, planning, fundraising, and problem-solving among others.
This is even harder when one does not have an accounting background, and many don’t have. It is an open secret that most business owners are at the mercy of their accountants and auditors when it comes to financial matters such as computing profit and loss, paying taxes, bookkeeping and analysing financial data to make key decisions.
However, running a business successfully is like keeping fit. If you want to stay healthy you have to eat well and exercise regularly regardless of your busy schedule. You cannot delegate going to the gym or eating health food. Likewise, there are areas of business that you must be fully involved if you want to keep stress and failure at bay.
1. Cash flow
Be in charge of your cash flow. Cash flow is the amount of money that flows in and out of your business. This money is important because you use it to pay bills and replenish stock. If you don’t control cash flowing in and out the challenge is you may fail to honor your financial obligation and run into problems with paying your bills or maintaining your inventory whether your business is profitable or not.
Track and monitor your expenses. These expenses require a high level of discipline in terms of recording and analyzing every expense in the business regardless how small it is. Business expenses are like leaks in a tank of water. If you have several of them, you can only fathom the extent of damage if you calculated loss at the end of the month.
You must analyze your finances. Keeping records is vanity if you cannot use the data to make financial decisions. This is only possible if you can analyze and correctly interpret financial records.
Do regular reconciliation. This is the process of verifying transaction records in various documents such as your register, cash book, banks accounts and expense statements. This will help your entry errors or fraud in case of any.
Be in charge of your marketing. As a business owner, you are the face of the business and the chief marketer. Marketing is too important a function to delegate. You must lead the marketing teach on the frontline.
Be in charge of your payroll. Payroll is a big cost to the business, and you can save a lot by having the right people doing the right job and paying them well. Get conversant with labor laws and requirements and comply with them right from the start. Labour laws are very punitive to the employer if violated and ignorance is not a defense.