Are you a business owner who is always struggling to make ends meet? Are you wondering why your sales turnover is high but as soon as your customers pay you, the money goes out straight away to pay your suppliers and your staff. Then there’s hardly any left over to pay your taxes and BAS obligations to ATO, much less, to yourself.
You’re not alone. There are many other business owners in your shoes, also grappling with this issue of cash flow and money.
In his book, ‘You Call the Shots’, Cameron Johnson shares the following thoughts about making your money work for you.
One of the most important qualities of the most successful entrepreneurs is that they appreciate the true value of money and pay close attention to how they manage it. Good money management isn’t a minor detail; it’s often the difference between lasting success and the kind of success that quickly crumbles into failure.
New entrepreneurs often make the mistake of thinking that the purpose of building a business is to make money. But money isn’t an end to itself; it’s only a tool. At first it’s a tool to help you build and grow your business further. Later, once your business is off and running, it becomes a tool for building financial security and retirement. It also can become a tool for starting additional new businesses. The key point is that your money is a tool for accomplishing what you want to accomplish – and that only happens when you control it. If you take care of your money, your money will take care of you. If you don’t, it can enslave you.
If you want to successfully start and grow your own business, you need to have a firm grasp on basis money management skills. This is something you cannot delegate to people you hire, and even later, if your business grows large enough to warrant an accounting staff, all the really important financial decisions have to come from you – and you can’t make those decisions clearly unless you have a solid grasp of how your cash flow is running.
A lot of people out there don’t think about how they’re managing their money or their credit. As soon as they get a pay cheque, they spend it. They find themselves with credit cards with a $5,000 limit, and the next thing you know, they’re paying the minimum payment – “Hey, it’s only $30 a month” and they’re $8,000 in debt. What they don’t realize is that by not being in control of their money, they’re letting their money control them – and that can have long range consequences.
That kind of debt is the entrepreneur’s worst nightmare.
The biggest problem in business today is that people spend more than they have; they let expenses grow more than income; and they try to become too big too fast. This is no different from the way so many people overextend their credit cards, just on a much large scale.
And here’s the thing: the basics of cash flow are simple. You don’t need a business course to learn this. You just need to be determined to stay on top of your finances and make your money work for you.
If you need assistance with forecasting, budgeting, cash flow management, bookkeeping, maintaining and understanding your financial records, contact us today. We’ll help you to join the dots to make sense of the numbers and set up a plan to take control of your finances.