Between client work, managing your own business, and that never-ending inbox full of emails, it's so easy to procrastinate on the financial side of things. Even I'm guilty of it! But in order to maximize your profit and minimize your financial stress (which, let's be honest, we all want), you have to get serious about your business finances.
Here's how implementing some best practices and getting serious about your business finances can set you up for success.
Business Finance Best Practices
I use the term "best practices" a lot, but what does that actually mean?
When I say "best practices," I really just mean "good habits." As with anything, personal finance takes practice. And as with any new habit, it's annoying at first. You mean I have to drink water again? I literally just drank water. Over time, it gets easier. Though you may have to force yourself to drink water now, in a few weeks you'll be reaching for your water bottle out of habit. In a few months, you'll notice you feel better, your skin is clearer, and you stay hydrated without even thinking about it.
Implementing best practices in your business works the same way. Sure, it'll feel clunky and unnatural at first, but in a few months, you'll see the benefits. Make the commitment to adding a few extra steps to your workflow, and I promise your business will be more successful for it.
Why You Should Take Your Business Accounting Seriously
We all know good habits are, well, good. But what are the actual benefits of implementing these best practices in your own business?
1. Increase your profit.
Let's get the obvious out of the way, shall we? That old phrase, "What you focus on grows," also applies to your finances. The more energy you spend managing your money, the more money will come your way. It's the Law of Attraction!
In a little less woo of a sense, you're also more likely to notice untracked expenses when you keep a close eye on your money. I can't tell you how many of my clients have come to me totally unaware of which subscriptions, software, and services they're paying for monthly. If you're not paying attention, those payments slip under the radar. That $9.99 subscription you forgot about could be another $120 in your pocket by the end of the year. It may not seem like much, but it adds up!
The fewer expenses you have in your business, the greater your profit. The greater your profit, the more money you can take home. Simple as that.
2. Improve efficiency.
Ever feel like you're running on a treadmill in your business - wearing yourself out but getting nowhere? I have. Most of us blame this feeling on having too much work and too little time. While that might be the case, it's also caused by prioritizing the wrong parts of your business.
Part of managing your business finances is understanding which of your to-do list tasks are directly making (or costing) you money. You could be spending most of your energy on non-money-making activities, which can leave you with little energy for the important stuff.
For example, maybe you spend most of your workday managing your client experience: answering emails, responding to Instagram DM's, and putting out small fires. By the time you get to your actual work (the tasks that make you money), you're drained and frustrated.
When you have a clear idea of which tasks make money, it's easier to justify putting the rest on the back burner.
3. Become more competitive.
Have you ever stumbled upon someone offering a similar service to yours at double the price? It's a shock to the system, let me tell you! It's great to keep your head down and get your work done, but you should also keep a finger on the pulse of your industry and niche.
This means getting real about your rates. If you set your prices when you launched your business and haven't adjusted them since, you're overdue for a raise! Do some competitor research, evaluate your own rates, and determine what percentage of your price you actually take home. Then, adjust to make more but still be competitive within your industry.
You can't accurately compare yourself to your competition if you don't have a clear sense of your own finances. And if you're lagging behind the rest of your industry, you could be missing out on tons of potential clients.
4. Develop new strategies for success.
Part of owning your own business is trying new things - new products, new services, and new strategies for growth.
In my own business, every new idea starts with a long look at my finances. How much am I making? How much do I want to make? Which of my current projects isn't pulling its weight? After I evaluate my finances, I can eliminate some of my workload, brainstorm projects, and find space in my busy schedule for something new.
As I launch that new project, I keep tabs on its financial success. Is it making enough money to offset my efforts, or is it sucking my business dry? Either way, I can use my observations to make decisions about the future of that project. And if it's wildly successful, I can celebrate exactly how much money it brought in. Score!
Ready to get serious about your business finances?
It's never too early to start taking your business finances seriously. In fact, the earlier the better!
If you're still in the DIY stage, come join The CASH Club, my monthly membership for business owners ready to take charge of their accounting and increase their income.
If you're ready to invest in expert financial help, book a strategy session with me! We'll evaluate your business finances, set some goals, and make a plan for increasing your profit.
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