6 financial tips to boost your business
A financial plan acts as a guide for you to manage your business. Essentially, it helps you be in control of income, expenses and investments such that you can manage your company’s money and achieve your goals. So here is a list of 6 financial tips to help you control and boost your business.
1 – Make a financial plan
Having a financial plan is one of the most critical factors for good financial management for businesses of all types and sizes.
As part of strategic planning, this step is essential to ensure sustainable growth. Even if the company is profitable, it can often take longer than necessary to develop.
So, developing a financial plan means accurately calculating the business’s initial investment, adding to what was invested in the company over a certain period, and adding to these two variables the forecast of annual expenses. This way, it is possible to obtain the total cost of the business over that period.
To determine the annual revenue forecast, you need to add up the business’s sales estimate and compare the cost to understand if the revenue is sufficient to guarantee the return on the invested capital. Another value that needs to be added is the company’s equity, already considering the possible equity adjustments, as these are also assets. That is, they can be transformed into cash if the company closes, for example.
With all your business’s financial statements in hand, it is possible to outline an assertive and strategic plan.
2 – Separate personal finances from business
One of the most common and most serious mistakes that the entrepreneur can make is to mix personal money with company money. This conduct can affect the business’s financial planning, affecting the company’s cash flow and profitability.
You can count on systems that can help manage your business to facilitate this control, like EPOS Systems. This software helps control the amounts that come in and out of the company and presents reports and statements for proactive monitoring of corporate finances.
It is essential to work from an actual revenue forecast and other accurate reports to ensure profitability. Having this on hand, it is possible to project the monthly earnings of the company.
3 – Understand the difference between revenue and profit
Revenue is, by definition, the sum of the profits earned by a company. In other words, it corresponds to all the income that enters the company from the sale of both products and services.
In addition to being essential to monitor financial health, this data is mandatory for the tax authorities precisely because it demonstrates the value of commercial operations for a given period.
Profit, in turn, is the total amount a company has after expenses are subtracted from revenue. It can be divided into gross and net income, according to the types of costs of each business.
4 – Classify your fixed and variable costs
All business expenses can be divided into two types of costs: fixed and variable.
Understanding the costs of your business is essential for financial management; based on these values, it is possible to determine the commercial viability of the company and assess the possibility of generating profit.
Because of this, it is vital to separate the fixed costs from variable costs:
Fixed costs represent ongoing expenses, regardless of how much the company produces or sells and are part of the business structure. For examples:
This type of cost varies directly according to the quantities the company produces or sells proportionally. For example:
Marketing and publicity.
5 – Managing Cash Flow
In practice, cash flow is the movement of cash in and out of your business. It is everything your company receives and pays. To ensure reasonable cash flow control, it is essential to keep detailed daily, weekly, and monthly earnings and expenses. For this, having an EPOS System can help you keep track of all your business transactions.
A good Electronic Point Of Sale System (ePOS) can help you spot trends, prepare for the future, and tackle any problems with your cash flow, keeping your business under control as you know all the financial movements.
An EPOS System can help you organise your business’s cash flow and control a lot of other business processes with different integrations:
Deliveries & purchase orders.
Sales & margin drill-down analysis.
Point of sale reporting.
Real-time point of sale integration.
6 – Have a cash reserve or emergency fund
Most business owners will admit that things don’t always go to plan. Everything is smooth sailing, and then an unforeseen circumstance knocks you over like a tidal wave.
Maybe a big customer is late paying an invoice, or crucial equipment broke and needed to be replaced, or for a period the sales didn’t go as expected, and your cash flow is suffering as a result.
That’s where your cash reserve comes in.
No matter how consolidated your business may be in the market, it is essential to have an excellent financial reserve for unforeseen events and even investments in the sector in the medium and long term, without interfering with the company’s financial health.
Find out more
To find out more about Retail Solutions’ Epos System, simply fill out our contact form and one of our team will get in touch with you.
Alternatively, you can call or email for more information:
Call: +353 (93) 23900
Visite our website: www.retailsolutions.ie
About the author
Juliane Camozzato is an Executive Marketing at Retail Solutions. You can follow her on LinkedIn!
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