Tips to running a small business!
I am often asked, how should I run a business? That is a question that has a million answers! Because nearly all businesses are different.
These are some sound ideas and best practices that I have seen over my years of helping businesses.
1. Record / Bookkeeping: Bookkeeping is the recording, on a day-to-day basis, of the financial transactions and information pertaining to a business. It ensures that records of the individual financial transactions are correct, up-to-date, and comprehensive. It allows all transactions to be summarised and presented in a way that allows the owners to understand how their business is going and make decisions with good, accurate information.
Most of us can’t summarise a box of receipts, invoices, and bank statements in our heads! Plus, it is a legal requirement under the Income Tax Act.
2. Collect your income: Most businesses are busy doing their job, selling chocolates, repairing cars, mowing lawns etc. then they are too busy or too tired to chase up what they are owed by their customers. If you don’t, you will go broke! Various studies show that the best time to get paid is when you do the job, don’t delay, it only gets harder.
3. Don’t ignore your customer: if you get a call or an email or any sort of enquiry, strike while the iron is hot, and do that quote, take that booking, get that job, and then get that sale! We are all busy and tired, but it’s the most important thing you can do.
4. Know your costs: a business is busy but goes broke! The reason is often that it’s costing more than they are making. We sometimes forget the hidden costs, the ones we don’t see every day. The mechanic knows about the parts used on the job, but what about rent, insurance, electricity, gas, postage, phone, internet etc. You must build those other costs into your price.
5. Do I need a budget: well maybe, but more importantly what is a budget and how do you use it? A budget is a financial plan for a period, normally a year. It helps you think about all the costs and income you expect for the future year. It helps with working out your costs, and you can use your past years bookkeeping to give you a base for the budget, and thereby work out how much you need to charge to make money.
A business is like a baby or small child, it needs constant attention, on a daily basis, you cannot just give it attention once a year at tax time.
Do not be scared – be organised and prepared. If you would like some help, give me a call.