5 Steps to Take Control of Your Business Finances – Step 1
By: Shane Bender
You may be wondering if you missed the first four steps in taking control of your business finances. If so, check them out below.
Does the word “accountability” sound too challenging or threatening? Does it sound like too much work or too structured? One challenge as a business owner is finding people to discuss ideas or finding time to grow and invest in your own personal development. How do we do this when we stay busy all the time? In short, we really don’t have time to not do this. We have to invest in ourselves or we could get burnt out, or the competition could wipe us out. We could be wasting time or missing out on revenue by not taking advantage of new technology or ways to get leads. The exciting thing is that these days there are so many affordable and flexible ways to do this.
Every business owner should review key reports to understand how they are doing financially. It is essential that the reports are close to the end of the previous month in order to take action and make adjustments as needed. Any accounting package will have an Income Statement and Balance Sheet. These reports will have more meaning if you compare them to your budget or plan for the year, last month, or last year. The Income Statement will give you an understanding of the revenue, expenses, and profit in your business. The Balance Sheet gives you a snapshot of your cash, assets, liabilities, and equity in your business. For more on the Balance sheet, check out a post called “The Balance Sheet is the Most Important Financial Report“.
Depending on the size of your business there are many different metrics, reports, and dashboards that are helpful. At one of the companies I worked for, we had a simple metric that we used to determine hiring and ensure we remained profitable. We simply wanted to run the company so that revenue averaged $17,000 per head per month. We knew our break even, and this was an easy metric to calculate and make decisions.
Another form of accountability is writing down goals and journaling. I realize some people have trouble doing this. We instantly think of New Year’s resolutions. Many of us write down goals and never look at them again. Try using “The Freedom Journal” to help. I am in the middle of a 100-day goal that is quite challenging for me. There have been numerous distractions that have taken me off course, but the journal brings me back. This journal requires that you write down the following each day:
For more information check out “5 Reasons to Focus on 1 Goal for 100 Days“.
We all have habits, but how do we increase our good habits? I realize there are books written on this. A great one is “The Power of Habit” by Charles Duhigg. One thing this book suggests is that our willpower decreases throughout the day. Whatever we want to accomplish that is hard or challenging should be accomplished earlier in the day.
I was listening to a podcast on The Ziglar Show and they were interviewing Joshua Spodek and discussing Self-Imposed, Daily, Challenging, Healthy Activities (SIDCHAs). These habits could be many different things from exercises like burpees to writing, reading, prayer/meditation, and much more. When I heard this, I started doing burpees which are quite tiring, but an effective exercise to do.
Also, Michael Hyatt has a course called “Free to Focus” that he offers where he discusses having a Morning Routine. Some activities I include in my routine are the following:
Also, I am a fan of personal development. I realize sometimes it can get overwhelming to read enough books or listen to all the podcasts. Today it is easier because there is so much content at our fingertips. There are online courses that can be taken at any time. I have heard that you should spend 3-5% of your budget on training and personal development. Therefore, I will give you 5 reasons why you should invest time on personal development:
Finally, sometimes we need others to help us become better than we are. I have personally struggled with spending the money on a business coach but can definitely see the value. There are mastermind groups and other networks that can support you. I do think that much of the accountability comes with your own desire for commitment and improvement. You can spend money on coaches and groups, but you have to find time to implement the change. Reviewing your financial reports, journaling, setting and reviewing goals, developing good habits and routines, and setting aside time for personal development will go a long way.
At the end of the day, we need to surround ourselves with the right people. This quote tells it all.
“You are the average of the five people you spend the most time with.” – Jim Rohn
Over the last few weeks, we have discussed the 5 steps to take control of your business finances. These steps will not make us masters overnight. I am working on a course to offer a way to focus on this for 30 days. Signup for the weekly blog to hear of this announcement and much more. All of this takes time to develop and grow as we strive to grow our business, increase our focus, and have a more enjoyable and fulfilling life to enjoy.