Money man­age­ment adds up to suc­cess

Joondalup Times - - SHOP LOCAL -

Lo­cal Busi­ness Mat­ters David Ea­ton - WA Small Busi­ness Com­mis­sioner

AN es­sen­tial part of be­ing a small busi­ness owner is know­ing how to set up and man­age your fi­nances.

Good fi­nan­cial man­age­ment is fun­da­men­tal to achiev­ing busi­ness goals.

Skills in this area will dic­tate ef­fi­cient and ef­fec­tive use of money.

The term is of­ten in­cor­rectly thought to re­fer to bud­get­ing, how­ever I pre­fer to use the term ‘planned spend­ing’ as the aim is not to pre­vent spend­ing but rather to bet­ter al­lo­cate funds to achieve goals.

Poor fi­nan­cial man­age­ment is the rea­son most busi­nesses fail (i.e. the lack of prof­itable sales).

An ex­am­ple of this would be sell­ing a lot of a prod­uct that is sold at a loss in­stead of a profit, so the more sold, the greater loss.

One of the ways to im­prove fi­nan­cial lit­er­acy, is to make use of an ac­coun­tant. They’re a great re­source, es­pe­cially for a start-up busi­ness.

Ac­coun­tants can teach the ba­sics and as­sist with de­ci­sion-mak­ing.

How­ever, most small busi­nesses are un­likely to have an ac­coun­tant in­volved in the daily/weekly op­er­a­tions, which is why it’s im­por­tant to have a good un­der­stand­ing of fi­nan­cial man­age­ment.

Fi­nance is more than just money; it’s the foun­da­tion of your busi­ness.

Un­der­stand­ing this will help own­ers man­age money, im­prove cash flow, plan fu­ture growth, meet le­gal obli­ga­tions, iden­tify the break-even point, max­imise prof­its, and bet­ter un­der­stand busi­ness' strengths and weak­nesses.

The SBDC’s Un­der­stand­ing Busi­ness Fi­nan­cials work­shop will help own­ers un­der­stand and mon­i­tor busi­ness per­for­mance, spot prob­lems be­fore they get out of hand and help with sound fi­nan­cial man­age­ment de­ci­sions.

For help, visit small­busi­ness.wa.gov.au or speak di­rectly with an ex­pe­ri­enced ad­viser on 13 12 49.

Don't miss my next ar­ti­cle about ways to pro­tect in­tel­lec­tual prop­erty.

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