Keeping your business finances in check will be the difference between success and failure. Your business exists to make money, but if you don’t get the foundation of your finances right, you could end up without anything left after your expenses.
Here are the five key foundations you should have in place to ensure financial success in business:
Foundation 1: Structure
The first thing you need to get right is how to structure your business. Many businesses in New Zealand operate as sole traders or partnerships, but there can be certain tax or insurance benefits to incorporating as a company. Speak to your accountant or bookkeeper about your options and make sure you’ve chosen the best structure for your situation.
Foundation 2: insurance
You’ve poured your heart and soul and probably a significant amount of your own money into making your business a success. If you’re like many kiwi small businesses, you may also have borrowed or secured lending against personal assets or your family home. All this means that it's vital for you to protect your future by insuring your business against disaster. Speak to an insurance broker who specialises in business about what you need and what your options are.
Foundation 3: Systems
In order for the financial side of the business to run smoothly, you need to establish systems and processes that are sensible and efficient. And then you actually need to follow through on them. This is where technology is able to help you, with online cloud accounting software like Xero making invoicing, reconciliations, GST, reporting, and other financial processes easy and fast.
Foundation 4: Cashflow
Positive cashflow is what will keep the lights on and the business running, so it’s important to focus your efforts on making sure you’ve got your cash flow sorted. This means invoicing on time, following up on invoices, and not allowing inventory to sit around without rotation. See our other article about 5 ways you can improve cash flow right now.
Foundation 5: Passion
It’s not easy running your own company, and the majority of businesses fail during the first three years. The ones that succeed are those that demonstrate a passion and understanding of their market and industry. Passion carries you through the long days and sleepless nights, and helps you to make the tough decisions you need to succeed.
Those are the five foundations were subscribe to. Do you have all five in place?
Here at Bookbird, we’re all about positive changes to improve your business. We can provide you with that year-round visibility that’s so key to being successful in business, all while taking a stressful job off your hands. Go on, talk to the team at Bookbirdabout your business needs.