Top tips for sound financial management and bookkeeping
If there is one thing every business owner dreads, it’s the “Going Out of Business” sign. No one goes into business with the expectation that their company might fail. And yet, businesses don’t stay afloat simply because of high hopes. Hard work must be done to ensure your operation succeeds. As purveyors of business banking services to companies in Utah, we know what it takes for a small business to succeed. We serve small businesses across the Beehive State. And what do they tell us? They stay in business through sound financial management.
But what does sound financial management even mean? We don’t intend to simply throw around acronyms for the sake of doing so. You’re here for actionable information and we’re going to provide you with just that. Let’s dig into what means to operate your company with sound financial management in mind.
Principles of Sound Financial Management
When entrepreneurs start a business, they have visions of being the mega disruptor who changes an industry or the innovator who creates one. How many business owners would love to say they made the same kind of impact as Elon Musk or Warren Buffet? Fortunately, you don’t have to be a titan of business or finance to make a real impact on your employees and community. And it’s healthy financial planning that sets you up to do just that.
Financial stability and a steady cash flow may not be the most exciting of goals, but they’re both more achievable and, ultimately, more important for long-term success. Sometimes it’s the relatively boring processes that are responsible for keeping your company afloat.
For business owners who put a solid focus on that unglamorous but critically important task of financial planning, it can certainly seem overwhelming. That’s why we wanted to take a moment in today’s blog post to provide the Utah-area businesses we serve with business banking services a basic outline of sound financial management. In the end, it can mean whether the business stays afloat in hard times or gives it the ability to expand in good ones.
Guide Yourself with a Proper Budget
No matter the size or nature of a company, a budget is a critical component. Budgets are an essential tool for making leadership decisions because they allow the decision-makers to see the big picture of assets, expenditures, and more. Far too often leaders make decisions in a vacuum, unable to properly plan because their budget does not match reality. So, although some very small businesses can get by operating without budgets, they’re hampered by their inability to anticipate and adapt to changes in the marketplaces they serve.
We get it. Creating a budget for your small business is intimidating. However, thousands of small business owners successfully do it every day. It really is one of the most important tasks a new business owner must consider and plan for. A budget also isn’t carved in stone — most can and will change for various reasons. What is important is that your account for and plan properly for any changes that come up.
Utilize the Right Software Solution
In the end, you’ve got to keep your books and accounts in good order. But it’s not enough to focus solely on bookkeeping. All accounts and payments, payables, and receivables should undergo a standardized process and be unified within a single software system. Your bookkeepers should have easy access to cash flow data and other essential indicators of financial health.
Most small business owners use QuickBooks to keep their numbers in order, but there are also cloud-based ERP solutions available that can provide a unified structure and common operations procedure across the business. From bookkeeping and accounting to distribution software, there’s a lot to consider.
Many cloud-based ERP vendors now have all-in-one solutions that streamline and simplify business processes. Small business owners find new efficiencies without feeling like they are getting lost in a sea of numbers, figures, charts, and spreadsheets. We live in the golden age of technology, so there is no reason why small businesses shouldn’t utilize software tools to keep their financial house in order.
Consider Professional Bookkeeping Services
In situations where it may simply be too overwhelming to do your own books, consider finding outside help. Unless someone in your company is a professional accountant, it is highly likely you will need at least part-time professional bookkeeping help. At the minimum, an accountant can help file taxes and help ensure that a business doesn’t inadvertently violate any finance or banking laws.
Just always remember to focus on developing a good working relationship with a finance professional. This will be one of the key steps toward sound financial management. Outside accountants and community banks can also help provide advice on cash flow, savings, credit management, and all kinds of other pressing issues. And the more a business grows, the more indispensable it becomes to have a finance professional on board, so it’s smart to save time and begin a relationship early.
Are you ready to take your Salt Lake City-based small business to the next level through sound financial management? If so, contact your friends at First Utah Bank, Utah’s community bank. We can’t wait to help you grow your company and reach your financial goals.