9 Financial Tips That Keep My Business Alive
Posted on February 3, 2017
I’ve been running Intern Queen for 7 years and it hasn’t been an easy experience. A few weeks ago, I sat on a panel at a Women and Technology event. It was a great conversation but most of the people that sat on the panel with me had investment money. As most of you know, I started Intern Queen with $5,000 of personal investment (my savings account at the time). When you don’t have investment money, there’s a finite amount of income in your bank account. And if that money goes out and you don’t get money back in, you risk running out of business. When you don’t have investment, you have to watch that money like a hawk. If I were to “look away” for a month or two, I could risk losing everything. If I’m not watching the finances, I’m not maintaining a healthy business. Over the weekend, I did our business books for the month of May (as I do twice a month). With money on the brain, I thought perhaps my tips would be helpful to other entrepreneurs out there who might also be running a tight ship when it comes to the money.
1. Track Your Expenses and Sales. Make sure you are using a system like QuickBooks to track everything that’s incoming and outgoing. You don’t need to update QuickBooks every day but come up with a regular system that works for you and your business. Decide who is in charge of entering invoices, recording expenses, and making sure everything is categorized correctly in QuickBooks. I use QuickBooks Online which costs less than $30.00 a month.
2. Run the Numbers Once a Month (at least). When my business was making under $300,000 per year, I did the books once per month. Typically, the first week of each month, I would do the books for the month before. Now that we’re making more money, I do the books with our CFO twice each month to make sure we keep an eye on what’s going on.
3. Make Goals at the Beginning of Each Year. Before the first day of every year, I decide how much I want the business to grow for the coming year. Not only do I decide on the amount of money, but I decide how I want to make that money and what each revenue stream of the business should bring in.
4. Keep an Eye on Cashflow. You might sell a zillion dollars but if you don’t collect any of it, you are out of luck. Collecting money is just as important as selling it. If you don’t collect money, you can’t pay your bills and you can’t pay your team. Keep a close eye on your cash flow.
5. Collect Upfront. Whenever you can collect money upfront, do it. The last thing you want to do – is do the work – and not get paid for it. Most companies will not leave you hanging but sometimes, payment terms get to be 90+ days and it just gets out of hand. I mentioned cashflow in my earlier point and the thing that helps cashflow is collecting money ASAP. As my CFO reminds me, “don’t be afraid to ask for the money upfront.”
6. Be Transparent With Your Team. I go over the numbers for the business with my team every month. It’s important that they all understand our company goals, their individual goals, and what we’re working towards. Just to clarify, we don’t discuss salaries, we discuss sales numbers.
7. Budget Out All Expenses. If it’s something you spend money on, you should have a budget for it. Going into every single month, I have a budget for every category of the business; web expenses, employee payroll, my payroll, liability insurance, office payments, meals/entertainment, etc.
8. Cancel Unnecessary Sales Tools. I’m guilty of not cancelling sales tools even when I’m no longer using them. If you have old subscriptions to web servers, CRM systems – or whatever it might be – cancel them. They are just taking away from what you are building.
9. Don’t Take On Work You Can’t Afford To Do. Before you sign up for a new project or agree to take on a new client, make sure you familiarize yourself with the costs associated with doing that work. For example, are you going to need to hire your graphic designer to create something? How much do you have to pay your team to complete the work? Time is the most valuable thing you have and doing one project does take away from your ability to do other things. Know your numbers.