Money Matters

How to get your small business finances in shape

We all know the basic rules of getting fit: eat less, move more, and push yourself a little harder every day – just 1% daily improvement leads to massive gains.

The same rules apply when you need to whip your small business finances into shape. It won’t happen overnight. It takes discipline and commitment. There’ll be days when you fall face-first into a red velvet cake. It happens. Shake off the crumbs and try again.

Through persistent effort and by showing up every day, the results from your efforts, discipline, and sacrifices add up to some serious muscle.

Here’s a fitness plan to get your small business finances in shape

  1. Set a goal

“Run 10km in one hour” seems like a reasonable goal for someone who enjoys running. Me? I’d be impressed if I managed 500m without coughing up a lung.

When you set a goal for your small business finances, make sure it’s something you actually can and want to achieve. Consider your current financial situation, what’s possible within your available resources and restrictions, and what opportunities exist to take you one step closer to your goal.

The golden rule of goal-setting is that they should be SMART: Specific, Measurable, Attainable, Relevant, and Time-based.

For example:

  • Reduce operational expenses by 10% this quarter.
  • Increase market share by 5% by the end of Q3.
  • Save enough capital to open a second branch within two years.

Having a goal takes the guesswork out of decision-making, so it’s easier to say no to the things that shift your focus.

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  1. Have a plan for your small business finances

I can’t do 50 push-ups in a row. But five sets of 10 throughout the day sounds manageable. And smart.

Plans outline the daily, weekly, monthly, quarterly, and annual actions you can take to achieve your SMART goals.

For example, to reduce operational expenses by 10% this quarter:

  • What action can I take today to reduce costs? Ideas include not travelling to the office, not printing the 80-page document someone emailed you, and doing an audit of your subscriptions.
  • This week? Due diligence on contractors and consultants to which you can outsource specialist, non-critical, or mundane work that no one else wants to do or can do.
  • This month? Migrate from on-premises to cloud-based systems. They’re reliable, secure, and make managing your cash flow a breeze. With the right systems in place, you know exactly how much money is coming in, how much is going out, and what’s due to you in future. Cloud accounting is the way to go.
  • This quarter? Re-evaluate expenses based on monthly trends and insights delivered by your cloud accounting solution. For example, are you paying for licenses, services, or subscriptions that you don’t use? Can you save money by revising your insurance policy? Can you renegotiate payment terms with suppliers?
  • This financial year? Come up with strategic ways to “spend money to make money”. This could include upskilling yourself and your team, investing in content creation and marketing, or paying invoices early in exchange for a discount from your vendor.

Remember to revisit your goals regularly. As you get stronger, some things will get lighter. Set a new goal, change what’s not working, and try something new to see if you get a better result.

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  1. Monitor your progress

Progress photos show muscle definition and body changes in ways that scales and measurements can’t. They’re visual proof that you’re achieving your goals, and they’re great motivators to keep going.

Data is also motivating. Slap a smartwatch on someone and they’ll geek out on stats about their step count, active minutes, sleep quality, and stress levels.

Cloud accounting solutions are like smartwatches for business. They deliver real-time, visual insight into your cash flow, budget, profit vs expenses, tax compliance status, and so much more – in the palm of your hand, whenever you need it.

When you know your critical numbers, it’s easier to identify patterns and to understand what happened just before you went off course. And, since cloud solutions are better at visualizing data than spreadsheets, you can look back at snapshots in time, showing how far you’ve come and inspiring you to keep going.

  1. Outsource to the experts when things get complicated, or you need a mentor

There may come a time in your fitness journey where you either stop seeing results or set a new goal, like entering a marathon. Self-motivation can get you there, but you’ll get there faster – and get better results – if you work with experts. With a personal trainer, nutritionist, and physiotherapist making the important decisions, all you have to do is lace up and hit the road.

As your business grows, it’s wise to get expert input on big decisions regarding people, money, and strategy. Things like taxes, payroll, and financials get complicated quickly.

A trusted consultant that understands your business challenges and goals can guide you in making important decisions. The return you get in time, focus, energy, and peace of mind are priceless.

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  1. Prepare for the off-season

“Summer bodies are made in winter,” they say.

But winter has its temptations: comfort food, warm beds holding us hostage, and a strong desire to hibernate. It takes a lot of willpower and discipline to get through the cold months, but fitness experts tell us that planning is the key to success – Schedule workouts, treat them as appointments, plan your meals, go to bed in your gym clothes (ok, maybe not that one).

For businesses, the “winter” period could include the December holidays, the quieter months of January and February when people have less disposable income, or it really could be seasonal – retailers don’t sell many heaters in summer.

Knowing your numbers (see point 3) makes it easier to plan for the off-season. If data shows that sales always drop between April and June, for example, you can set a savings goal to cover the quiet period financially while you use the time to revisit your plan, change what isn’t working, and get some rest.

More wisdom for your small business finances

You don’t need much to get started. There are thousands of free home-based workouts online. And wine bottles work just fine as weights in Pilates class (or so I’m told). Some of the world’s most successful people give away their knowledge and strategies for free. Find them and start there.

But you do need to push yourself. Growth happens outside your comfort zone. Experiment, try new things, keep an open mind. Lean into the discomfort; there’s power on the other side.

You are what you eat. When it comes to content consumption, follow the 80/20 rule. Limit things like social media and Netflix binges to 20% of your free time. Spend the other 80% reading books, listening to podcasts, and learning something new. Remember: 1% better.

But indulge your guilty pleasure occasionally. Cheat days let us enjoy life’s pleasures without guilt. You work hard. Splurge some of your tax refund; invest the rest.

Rest and reward. This entrepreneurial life is demanding and exhilarating. It’s fast-paced and demands resilience and agility. Slow down. Breathe. Meditate. Journal. That’s when all the good stuff bubbles to the surface.