Dry Goods: 6 tips for financial management from successful entrepreneurs

To become a successful business owner, you do not need to be a financial innovator. The following are six tips about financial management from top entrepreneurs today.

Sabrina Parsons, CEO of liveplan, believes that "budgeting, forecasting, and planning are not only applicable to startups. If you apply these measures to a growing business, the growth rate will increase by 30%, you will become more successful, and the financial figures will look more beautiful ."

For entrepreneurs, it is not easy to read the trial form, income statement and balance sheet, but Parsons is right. When you start a business, you cannot simply consider those numbers. In fact, the factor that defines your success is how to integrate numbers into daily enterprise decisions. The following are six tips about financial management from top entrepreneurs today.

1. Profit is not the criterion for defining success

For a growing company, profit is not the best indicator for predicting the company's actual operation. In fact, profit indicators are often disappointing. "A new company or a fast-growing company will burn money quickly," said Matt risking, CEO of tsheets ." If your business is booming, you will find that your cash reserves are consumed much faster than expected. Your profit may be relatively low, but this may be a good thing because your business grows very fast. On the contrary, computing the company's business growth rate can tell whether the company is developing on the right path.

Remember, even so, profit is still the company's final financial goal.

2. Understand the indicators that affect your business

Some general financial indicators apply to all enterprises (such as revenue, expenditure, cash and gross profit ). However, Joshua Reeves, CEO of zenpayroll, recommends that enterprises consider their own unique financial indicators, including those key indicators. "For example, in a subscription-based company, there are two very important indicators: the customer's lifetime value (LTV) and the customer's acquisition cost (CAC ). LTV helps you understand the value of your customers, and CAC measures the cost to obtain these customers. Tracking these two indicators in different channels can easily measure the profitability of different channels, so as to focus on the best channels ."

Pay close attention to your business model and use industry peers to define your own proprietary indicators. What are the unique indicators that your industry needs to pay special attention?

3. Don't waste money on stupid mistakes.

When everything is available on the startup platform, you are easy to make mistakes, and these errors will consume your costs. So what errors should you pay attention? To give a perfect example, Parsons said: "To Manage Your receivables, prepare an agreement in advance and encourage customers to make payments as soon as possible. The money you get now is more valuable than the money you get after four months. The sooner the money is stored in the bank, the more interest it receives. If you can postpone the payment, or the customer delays payment, you can charge a late payment or the interest on the arrears. As a result, many small enterprises have lost the money they can deposit in the bank ."

Are there any other errors that can cause losses to you? You may have missed the credit card payment date, or you have to pay a fine for late payment to the supplier.

Take some time to complete your business processes and identify the Unknown fields that may cause losses. If you are not sure, ask your accountant and bookkeepers for help.

4. Audit Fees

"My previous company had over 30 employees and four office locations," said rissell. I found that all employees (and even the most loyal employees) are working on their own attendance sheets, which will bring me an additional salary of $2,300 each month ."

For a small enterprise, the sum of these figures is also a small cost. As the company's business grows, overspending will gradually become a problem, and you do not have time to monitor the flow of every dollar. However, taking the time to manage finance remains important. How can this problem be solved? Audit quarterly fees.

Perform a careful audit every quarter to see where your money is spent. Can you confidently say that you are not overspending? Does the software or service of the application need to be canceled now? What other aspects can reduce costs? Four such audits throughout the year can help you save thousands of dollars.

5. Cherish your time

"Small business owners often have a tight budget, which leads to a 'do-it-yourself mentality." Reeves said, "however, the most valuable resources are often their time. Entrepreneurs need to constantly think about whether they spend their time on the most important business. For example, if a business owner spends three hours a week manually managing his or her payroll, they may think that this has saved costs, but they have actually spent the time and effort that should have been spent on enterprise growth ."

Believe it or not, "Do it yourself" is a waste of money. This is why technology plays an important role in small businesses. It allows you to outsource complex tasks or achieve automated management.

Risking suggested that "business owners can step back and give up on-line work. Instead, they should evaluate how to upgrade technology. If possible, use cloud-based solutions and trusted consultants to solve the problem ."

Technology may bring about upfront costs, but the time and money it saves for the company can offset the initial cost. Which business processes can be automated to free up your time?

6. Create a system with long-term tracking success

What is the key to simplifying financial management? Develop a system to track your financial status for a long time and motivate you to set your goals. As Parsons said, "If you do not have a clear goal, you will miss a tracing data point. Your system needs to include your requirements and actual completion information, as compared with the previous year and the same period. If you want to succeed as much as possible, your system must contain the above four data points. This data makes decisions easier and increases the possibility of success ."

Such a system not only helps to verify future financial decisions, but also promotes improved financial health. Entrepreneurs cannot be too comfortable, otherwise growth will stop.

As an entrepreneur, you don't need to be a financial talent to succeed. It is important that you constantly work toward financial proficiency. Take the time to understand which indicators are most important to the business and how to measure and improve these indicators in the long term.

To adjust your company's financial position, I invite you to join a free webinar sponsored by me and Matt riskers, Josh Reeves, Sabrina Parsons, here we will share more experiences with our entrepreneurs and provide suggestions for business owners who want to finance and develop their businesses. John K. Bates, a communication and leadership expert, will lead this exciting conversation.

Dry Goods: 6 tips for financial management from successful entrepreneurs