Finances are usually a key concern for us as small business owners! Making sure we bring in enough money to pay the bills (and hopefully a lot more besides!) is a necessary evil, but the key word there is necessary. It’s really important to stay on top of your money matters.
Here are my 7 top tips for ways to manage your money matters better
1. Budget sensibly
When did you last review what you spend money on in your business?
It’s easy to get into the habit of spending money on some things and not others. Perhaps you regularly buy business cards, have subscriptions to networking groups or other support networks, and pay someone to manage your website.
At the same time, perhaps you baulk at paying for admin support that would help your business run so much more smoothly, and free you up to find and / or service more clients. Or maybe a small monthly payment for an accounting app such as Xero, Wave or Quickbooks would save you endless time updating spreadsheets and reconciling your income and expenses.
So take time to reassess what you spend money on, and make sure that every penny is spent sensibly – on the best deals for basic essentials like business cards, and on the right kind of help to support your business.
2. Update your accounts regularly
Managing our finances becomes much easier if we tackle it regularly. Keeping track of invoices issued (and paid) and money spent on materials, suppliers, subscriptions, etc. is a much bigger headache if we put it off and only tackle it once or twice a year. It pays to pause regularly to review how things are going and, if necessary, to update any manual records. Of course this is easier if you are using one of the cloud based software options such as those mentioned above.
Doing this also enables you to consider whether there is something you need to stop doing (because it’s unproductive financially) or do more of (because it is delivering financial benefits).
So book a date with yourself once a month to update your finances.
3. Focus on what you’re good at
If you run your business as a limited company it’s a legal requirement to involve an accountant, but if, like many small businesses, you operate as a sole trader then using an accountant is completely optional.
However, if you don’t enjoy handling your finances, and find them a struggle, then having an accountant or a bookkeeper is almost certainly a worthwhile investment, leaving you free to focus on what you are good at which will help your business to be more successful.
Most, if not all, bookkeepers and accountants who work with small business owners are happy to work with your software such as the apps I mentioned earlier. These new cloud based types of software allow you to give them access so they can offer ad hoc advice as and when needed, and do as much or as little as you want.
4. Be clear when to start the payment clock ticking
Many of us give something away in order to attract clients. Perhaps it’s a free ebook or guide, designed to get people to sign up to our mailing list, or a free sample that we give out, or maybe it’s a free conversation where we explore what the potential client is looking for and let them experience what we have to offer.
If you do offer a freebie – and there’s absolutely nothing wrong with that as a marketing tactic – then make sure you are very clear about when the freebie stops. It’s easy to get sucked into one more conversation, another free sample or another little piece of information or advice.
Take the time to get clear in your own mind what your policy is, and then stick to it. Ultimately, people who really want to work with you will respect you for it, and will value your work more.
5. Charge what you’re worth
Do you find the whole issue of knowing how much to charge a bit awkward? You’re not alone. It’s tempting to think that you are selling your time (if you offer a service) or that you are selling the materials and production cost (if you sell a product), but it’s so much more than that.
A great way to think of this is to ask yourself: “would an 18 year old school leaver be able to do what I do?” If not, what is it that enables you to do it? Make a list of all your skills, training and experience that enable you to do what an 18 year old could not.
Then ensure that your price adequately reflects all of these.
6. Help clients understand the value of your work
When we do tell potential clients our price, we sometimes get pushback. Planning in advance how to deal with typical objections can be really helpful.
For example, if a client says “that seems very expensive”, what will you say? Possible answers might include
- “I’m not the cheapest but I believe in offering excellent quality and what makes me stand out from the cheaper options is……”
- “I’ve researched the market and this is the market rate for this quality of work / market price for this kind of product”
7. Be clear on your discount policy
Don’t be caught on the hop if someone asks for a discount. Think through in advance what your policy on discounts is. A good rule of thumb is to always ask for something in return.
- Yes, I can offer a x% discount if you ….(pay in advance / book x sessions at once / spend more than £y on my products)
- I offer a loyalty scheme which means that after x sessions you get one free
As you read though these 7 top tips, which one jumped out at you?
What can you do today to put that top tip into practice?