Disclaimer: Please note this article is of a general nature and should be used for informational and educational interest purposes only. Please seek professional advice before making any decisions in relation to your own personal circumstances.
It might be the start of a new year, but we are of course only half-way through the current financial year and this means you still have six more months (well, just under) to hit those revenue targets that you set for yourself back in July 2012.
How are you tracking? Is the financial year shaping up the way you thought it would? I hope so, but if you’re reading this and thinking ‘I have no idea’ because your books aren’t up to date, then that is a problem that needs to be tackled. Pronto.
We all know that having a way to track things plays a big role in the successful achievement of any goal, and your business finances are just the same.
There’s no point waiting until after the financial year has ended to work out if you had a good year or not. You need to know how you’re tracking on a regular basis in order to be able to make better financial decisions, but most importantly to start ramping it up if you’re not on target to reach your goals.
We’re super lucky these days with software like xero, saasu, and freshbooks that, if managed well, allows for pretty much daily financial data for your business. You can run your reports at any time during the month quickly and easily to see exactly where you are at. So why not set yourself a ‘new year’s resolution’ for 2013 to get your business finances in order. It’s easier than you think, and will pay dividends long-term.
Having your financial data up to date will mean you know exactly what you owe at any point in time, this means no nasty surprises from the ATO. You’ll be able to make sound purchasing or hiring decisions because you’ll know exactly what you have available to you and how profitable you currently are. You’ll get a better picture of your monthly revenue and what you can expect, and ideally by setting a proper business budget (for both expected revenue and anticipated expenses) you’ll be able to track your progress and stay on top of it.
This last point is probably the most important, simply knowing how much you are spending in a certain area of a business can be enough to curb your spending (when you might need to) in order maximise your profitability. If you have no way of knowing exactly what you spent in that area until the end of the financial year, it might be too late to rectify the situation and make a better decision.
Just remember, everything you spend in business needs to provide you with a return on investment, otherwise there is simply no point in spending it. So get your books in order, and enable yourself to make the best financial decisions you possibly can for your business in 2013.