For business owners, preserving financial wellness couldn’t be more important. You need to feel confident in your finances, and that starts with knowing your business is financially healthy.
As you work to grow your business, there are a LOT of costs associated with the process. And that’s okay! But you need to focus on your financial wellness in order to successfully grow and scale your business.
When you know your finances inside and out (and take active steps to improve them), you really set yourself up for success. With the right steps, you’ll be able to grow your business with less stress.
How To Understand The Current Financial Wellness Of Your Business
Want to understand your financial wellness on a deeper level? Here are four critical steps you can take right now to get a clear picture of what’s happening in your business.
Evaluate Your Current Financial Status
The first step you need to take is to evaluate your current financial wellness. Just like a doctor takes a patients’ vital signs, you need to keep a finger on the pulse of what’s happening in your business.
Keep track of things like:
- How much money is coming in
- How much money is going out
- Why your money is flowing in that way
This advice sounds basic, but it’s really important!
Knowing this information is the foundation of understanding your financial health. Many business owners forget to focus on cash flow, but staying vigilant will help you understand what’s really going on.
You can easily monitor cash flow inside of QuickBooks Online or other software programs.
Look For Expenses You Can Trim
Next, you’ll want to examine your current expenses and look for spots where you can save.
Of course, you should strive to spend less than you earn in your business. But as you’re growing, it’s not always easy to maintain that balance.
Focus on seeing if there are any areas where you can save money. Are there services you can negotiate lower rates for, subscriptions you can cancel, or things that aren’t really helping you grow? These are all great spots to eliminate some expenses.
Visualize A Positive Financial Future
Visualization is really powerful. Most of us don’t associate visualization with our finances, but it can have a huge impact. Try to picture your business’s financial wellness in one year, five years, ten years, and beyond.
Beyond visualizing your success, set goals. Write them out, and be specific about what you’re hoping to achieve!
Stay On Top Of Your Bookkeeping
Many of us wait until the end of the year to think about our business bookkeeping. Staying consistent with your bookkeeping is a much better strategy!
Consistently keep up with your bookkeeping to stay in control of your financial wellness. Set aside a specific time each week to handle your finances! This keeps things manageable and not so overwhelming.
5 Ways To Improve Your Financial Wellness and Find Money For Your Business
Now that you have a better understanding of your current financial wellness, let’s talk strategy. How do you start working to improve your business finances?
There are some really easy ways to save money in your business without having to create a budget. Over the years, I’ve found that most people have a hard time sticking to a budget because it’s often out of sight when you’re actually making a decision about whether or not to buy something.
Here are my top five ways to find more money in your business without creating a budget…and improve your financial wellness along the way.
Start a Wish List
Whenever you want to make a bigger purchase (or even a small one), add the item to a Wish List. Then, keep it there for at least 30 days!
If you come back to that item in 30 days and you still think it will be a valuable investment for your business (and you have the funds), then go for it! This habit helps you curb compulsive spending and focus on what really matters in your business.
Do Regular Expense Analyses
Reviewing your expenses on a monthly or quarterly basis is an essential practice for the financial wellness of your business. Oftentimes, we sign up for subscriptions and then forget about them, or we go to a cafe once a week to work and don’t realize how much that adds up.
Go through your Profit & Loss report line by line, and review where your money went. Does your spending truly give you a return on investment in time, emotion, or value? This will help you keep your expenses lean and form different spending habits.
Accept Bank Transfers
If you send invoices to clients, you should absolutely have the option for your clients to pay you via bank transfer or ACH. This limits the total amount of processing fees you pay, which can really add up over time.
QBO is my number one recommendation for invoicing because it has the bank transfer feature (as well as allows credit card payments). Plus, it’s all happening right within your accounting program, so the bookkeeping aspect is easy!
Another option is Stripe, which has an ACH feature that caps the processing fee at $5. If you use a CRM like 17hats, then you can accept ACH payments as well as credit card payments.
Allocate To Savings
You need to have an account specifically for savings in your business. This is a key part of financial wellness—you’ll be protected in case of unexpected financial emergencies.
If you don’t have any savings in your business, you can start today by allocating just 1% of your income to a savings account! Then, you can gradually grow that percentage up to 5% or 10%.
It’s really important to have some buffer savings in your business for when things slow down or an unforeseen event happens, and this is a very easy way to build up those savings.
The way you bank (and where you bank) can greatly affect your financial wellness.
Look for a bank that doesn’t charge you monthly fees and has a decent interest rate. Large national banks, like Wells Fargo, can hit you with a lot of frustrating fees. I’ve found that small local banks and credit unions tend to have the least amount of fees and the most customer-oriented policies!
That being said, Ally is an online national bank for personal accounts and they have a great interest rate on their savings accounts. There’s no need to pay for account fees, and it’s best when your savings accounts can earn interest, so take the time to find a good bank and it will pay off!
Your financial wellness is the foundation of letting your business thrive. These tips will help you cultivate financial wellness so that you can rest easy knowing your business is in great shape.