How to Create A Personal Programme for Better Financial Management

What is the Better Financial Challenge?

It’s a personal program you set for yourself as a small business owner to set yourself up for success. It’s setting up good habits to provide better financial management. It will safeguard your business’s finances against a dramatically changing environment and support your business growth.

Just like you set fitness goals as a small business owner, you can not neglect the basic need to manage your finances regularly to ensure your business’s health and financial growth.

We all know how we get physically fit. One step at a time, repeat day in and out until it becomes part of your normal life. And the reward?  Better flexibility, stronger muscles, longevity, and good mental health.

And better financial habits are just the same but for the health of your company. Better financial management will keep your business agile, adaptable, and able to grow which will also support your mental health.

When you start a business you follow a passion, we soon learn we need to be a master of all skills in order to get it off the ground. One crucial function you need to master early is managing your cash flow. If math wasn’t your strong point you need to overcome this otherwise you may as well go back to the 9 to 5 office job.

What are the fundamental steps you need to set yourself up for success?

1. Make a business plan
2. Set achievable goals
3. Track your progress
4. Reward good behavior

1.  Make a business plan

A business plan will allow you to focus on the steps you need to make to achieve your specific objective(s). It details your short and long-term objectives and helps you set goals you want to achieve in a timeline that can be a backbone to your business’s growth strategy.

It is the fundamental first step to saying ‘yes, this is the business I want to invest my time in’. It also allows financial advisors, investors, and your team a guide to ensure they can support your business effectively.

It is a rewarding learning process to ensure you understand:

• The Market you are entering into – what are the conditions of the market, how big is the total available market, what is a realistic goal to set yourself around the portion of the market you could obtain.
• The Competitive analysis – this helps you design your point of difference
• The Customer segmentation – who are your customers and what problems do they have that you will be solving
• The Marketing plan – understand the channels to your potential customers
• The Operational plans – the effective management of your company
• The Cash flow projection – understanding how much money you need coming in and out
• A Long-term growth plan.

Spending valuable time detailing this will allow you to iron out issues and focus on strategic goals before you have even started.

2.  Set achievable goals

When Uber set their goals it wanted to be the market leader with $1 billion dollars in yearly revenue. We can’t all be Uber. The question is what are the biggest priorities for your business to focus on that will make the biggest difference?

• What are you doing well and can be made better?
• What are opportunities you have not managed to get to?
• What are others doing well you can adopt or reinvent?
• What are you wasting your time with that is not working.

By evaluating your performance and that of your team select two to three focus points and targets you want to achieve.

Give yourself an appropriate timeline and set incentives to reward yourself along the way for a sense of achievement and to make it more exciting.

So how do I get to $1 million dollars in a year? 

Your business is like fitness, you will not feel satisfied when you plateau, you need to keep shifting the goalposts little by little.  

As a sales leader, I use carefully structured KPIs to form stretch targets for my team, achievable with consistent daily effort with an incentive to make them hungry to push themselves. In quarter 1 our goal is to increase conversion targets of customers by 5%.  This was an achievable period of time for the sales team to hone their skills and make it a habit.

By Quarter 2 their stretch targets increased and our attention focused on improving the revenue received by upselling. Carefully selected KPIs and time frames improving both conversion and our incremental sales revenue within 6 months which added up to our long-term goal of increasing sales revenue.

Wrapping your short-term goals around what will help you achieve the long terms ones allow you to keep focused and make that mountain more of a series of hills you need to climb, so it’s not just about winning the marathon.

3. Track your progress

You can’t make critical financial decisions based on thin air. You need accurate, up-to-date financial data and analytics in an easy read format so you can track your progress and make the right financial decision for your business. The financial reporting needs to be real-time, simple to use, and quick otherwise you are more than likely to put it in the too-hard basket when you want to make a decision that will affect your cash flow.

Spreadsheets were okay for our grandfathers but the smart way is with accounting software like Xero to maintain your accounting and a Cash flow Forecasting tool like Moolamore for your future planning,

When Moolamore was built we had business owners in mind. It was designed by an entrepreneur to have accurate, real-time data on their mobile phone wherever they were in the world.

Key steps to controlling your cash flow.

• Create budgets and keep them flexible, by setting target spending for marketing, stock, staff weekly, monthly you are taking care of the pennies which will look after the pounds.
• Reconcile your accounting software regularly. Make it a morning habit like taking a stretch along with your coffee. You can pick up issues quicker rather than feeding a nasty surprise festering in the darkness.
• Use a budgeting tool like Moolamore to help you visualize your finances and keep track of where your business is spending against your budget.
• Prioritize your most valuable accounts and suppliers. Loyalty and good relationships can go a long way if you have a tough financial month.
• Review and assess at the end of a quarter where you can cut cost and where you can refocus funds.

4. Reward yourself 

Rewarding positive behavior elicits positive emotion. Celebrate when you reach a target or achieve your goal even if it’s just ‘a high five well done!’ in your back office at the end of the night. As a small business owner, you shoulder a lot of responsibility.  If you do not find the time to assess where you have come from and celebrate your achievements you may risk forgetting the reason you got into this in the first place.

A strategic reward should also be that you are the first paid at the end of the month, it is just as vital to your business’s health as your cash flow management. Like maintaining a motor with regular oil you need to ensure all your personal expenses are paid to ensure your focus is on growing your business not ‘how am I going to pay the mortgage this month’. You can then set incentives around your business’s achievements for yourself and the team. Bringing extra reward and motivation to keep pushing for that extra dollar.  By separating your personal and business finances you can safeguard your hard work at the same time.

Starting on a journey of better financial management can be a daunting task, however, nothing will improve if you do not take steps to make it happen.

Knowing what you want to achieve and how you can track it are two of the foremost’s important things you can do to set yourself up for success.

With Moolamore, you make the tracking side as easy as possible. Have your numbers at your fingertips anytime, anywhere.

Download the app and try it for yourself with a 30-day free trial and personal onboarding – you won’t regret it!