Featured Whistler Question newspaper column, May 30, 2017: Build a Financial Foundation for Your Business
Proper financial management is a top concern for business owners – especially for small businesses whereby there is less room for error.
Here are three money management strategies to take your company from striving to thriving.
Amp Up Your Knowledge
Educate yourself. Of course, this is not a suggestion to do your own bookkeeping but instead, hire expertise to tackle that task. However, as a business owner you must know how to read financial statements and understand the four essential details that comprise them. First, a cash flow statement analyzes operating activities, investments, and financial in/outflow. Second, a balance sheet provides information related to the company’s assets, liabilities and shareholder’s equity. Next, the income statement reflects the revenue earned within a specific period of time. And lastly, shareholder’s equity represents the amount by which the company is financed through common and preferred shares.
Monitor, Measure & Manage
Consistent review of your company’s financial performance in comparison to past financial statements is necessary to project your future revenue, expenses and cash flow.
Monitoring and measuring that financial performance should be complemented with managing your money. This has several components but here are some to consider.
First, managing costs – both fixed and variable. Fixed costs often stay the same whether your business is making money or not, but there is opportunity for savings in variable costs so review these regularly.
Next, invest in cloud-based accounting systems so you have real-time insights. This allows you to store, update, track, and access data from anywhere.
The last piece to the financial management puzzle is to surround yourself with experts that will set you up for financial success. That takes us to the third strategy.
Source Out Your Financial Partners
If you aren’t financially savvy, engage the services of an expert. They can help you determine where your business is at, where it is heading and arm you with processes to manage it all moving forward.
It is also a good idea to source partners in the areas of tax planning, investments and lending. Taking the time to find the right financial institution is worth the effort. Some considerations: lending capacity, lowest rates on business accounts, resources for growth support, to name a few. In a more socially conscious climate, you may also want to consider a financial partner with a commitment to community and a solid set of values.
The upcoming Whistler Open Forum Event chose Guest Speakers from Vancity and Squamish Savings because of that commitment. Their belief in providing small businesses with financial literacy and an inherent value of trust in people equates to building economic self-reliance and resilience.
As Vancity’s Community Business Account Manager, Caroline Coudreau has witnessed small businesses mistakenly failing to invest the time to build solid financial foundations. Through her financial literacy workshops and speaking engagements, she provides small businesses with the knowledge to set up strong money management strategies to avoid headaches down the road – think about creditworthiness, appropriate tax and legal structures and risk management.
If you’d like to learn more, the June 7th Whistler Open Forum will share real-world advice on how to feel in control of your money and strategies to stretch it further. Buy your ticket by June 1st for an early bird bonus!
At Lighthouse Visionary Strategies, Cathy Goddard offers business and life coaching, workshops and the popular Whistler Open Forum Speaker Series. She is founder of Lighthouse Mentor Network, a mentor program nominated for Small Business BC Awards for 5 consecutive years. She writes this column for the Whistler Question newspaper.