We are in unprecedented times, and we’re all sailing through uncharted territory. But as a business owner, you should take solace in the fact that, as long as you can balance the books, you can see yourself through anything. Even though you may not be able to expand as a business, you can and will be able to keep your head above water. In other words, when you balance the books, you make it viable for you to survive just about anything. World leaders have been trying to balance the books of their respective nations since time immemorial. They have been doing so because of this concept, that is scaled up. They can survive a recession as long as they can make sure they aren’t spending more than they make, but they aren’t owing anything either. They can operate at a high level and yet, be ready to absorb any blows to their progress. So let’s see how your business can do this.
Back to basics, with cash flow
The cash flow chart is the bread and butter of an accountant. The basic premise is, how much money is coming in and how much money is leaving your books? What could cause a negative balance?
- Spending too much on expansion projects. Expansion projects can spiral out of control VERY easily. You are paying for buying properties, hiring website developers, hiring employees, marketing campaigns, logistics, storage services, etc. Too much money going out to these types of projects will often mean, your income cannot supplement the increase in money being spent or ‘going out’.
- Not getting a handle on your expenses. Paying for employee travel, utility costs in the office, food for employees, hotel rooms, etc, all of this can add up and result in leaking money everywhere. So grab a hole of your expenses and stop them from spiraling.
- Paying for professional services. When you own a business, you will be paying for various services that are required in order for you to function. Paying for auditors, inspections from regulators, health and safety training and other services like accounting and risk management, are necessary. But, if you can find ways to receive discounts and cheaper services in any of these categories, do your best to do so.
Log your expenses
Now that we have established that expenses are one of the main reasons for your books leaning towards the negative, what can we do about it?
Logging your expenses receipts! This is a common mistake by so many business owners because they don’t save copies or make notes or logs of what they bought, when, how much and why, etc. until you look over your bank statement and then it appears to be too late, and a large chunk of your funds have vanished.
So one way to solve the issue is to log all your expenses while on the move. A business credit card is the best way to do this. Modern business credit cards utilize the cloud system, so you can see what you bought and all the relevant details online, anywhere on any platform.
There are four main categories for expenses.
- Entertainment and meals. Do you often have clients or customers over at your office? Do you pay for their drinks, food, parties, etc?
- Travel expenses. The most common and often the most costly expenses. When you have a marketing or sales team out traveling the country or world, their travel expenses have to be logged as costs can suddenly spiral. You can write these expenses off when it comes to your taxes, so it’s doubly important to do this.
- Gifts. When you’re trying to schmooze a client or perhaps when you are having an office Christmas party, buying employees and clients’ gifts is very common. Again, you can write this off on your taxes, so long what you bought and keep your receipts as proof!
- Office supplies. Of course, any business needs to have pens, printers, and computers. Office supplies are both an expense and a necessity in order for your business to function at a high level.
Tackle your debt
Perhaps the most obvious reason why you are struggling to balance your books is the bag of debt you carry around. Just as you get close to balancing your books, another large payment is deducted from your earnings. Debt can be an avalanche or it can be a pool of piranha, which pinch and snip away at you. If you have tried everything to lower your debts, consider reading this DTSS review. The DTSS program has shown business leaders that, utilizing some quirky and obscure conditions that are written into law, can mean that you are exempt from some fees. This can result in saving more money over time, being able to relinquish some of your debt immediately, and have your business be treated under a different status so as to make it easier for you to save more of your money. We recommend that you read through it carefully and see which areas could apply to your business.
Hire a professional
Hiring any of the following types of professionals would really help your business to balance the books.
- Accountant: they will let you know where your money is going, not just in the short term but long term plans too.
- Risk manager: their job is to identify where your biggest financial risks are and offer you solutions for mitigating them.
- Tax accountant: They will know which kind of tax laws you could most benefit from. So loopholes and grey areas that can lessen your tax burdens, they will show you how to gain from them.
- Auditor. If there is some kind of internal corruption or leakage, they will find it. You may be being conned by an employee, the auditor’s role is to find where abnormal financial activity is taking place.
Balancing the books is very rewarding. A business that can control and manage, how much money leaves it’s books in terms of how much money is coming in, can become more sustainable. It will also weather a storm far better.