6 Money Management Techniques To Help You Reach Your Goals

Money is the lifeblood of business. For the rare few money-savvy saving can be a breeze, but for the majority of people, it is often a source of stress and discomfort.

Maintaining profitable income is no easy feat, especially with the current business climate after the world attempts to recover from the Covid-19 pandemic. This article contains 6 money management techniques to help you reach your profit goals.

In case you didn’t know:

• 82% of businesses that fail do so because of cash flow problems
• Approximately a quarter of small businesses begin with no financing whatsoever
• Only 40% of small businesses are profitable, 30% break even and 30% are continually losing money

1) Understand Your Finances

Before you can begin to make a serious profit, you need to understand what that really means.

You also need a foundational understanding of financial terms and the capability to read financial statements. You won’t be able to tell if you’re winning or losing if you don’t understand the basics. Being able to read a balance sheet, income statement, and cash flow statement means you’ll be able to regain full control over your business and understand how to really make a profit.

2) Create a Budget

Dedicating time to create and maintain a business budget can make money management a lot simpler. Budgets help you set expense and revenue goals. Your budget will tell you what expenses are necessary to run your business. When you understand how much cash you’ve got to spend, you can make more aligned financial decisions.

7. Manage inventory

Managing inventory is an important part of running a business. If you order too much, you risk it collecting dust in the storage room but if you order too little you’ll find yourself constantly running out of high-demand goods.  Improving the way you manage inventory can help you manage money in your small business.

Tracking how much inventory you have in your business is a great way to avoid crossing the fine line between having too much inventory and not having enough. Record inventory purchases and sales in your books and spend time monitoring how much you have on hand before ordering more.

3) Ask What’s Stopping You

Taking an objective look at your whole enterprise is an important step to making a real profit. Understanding what’s holding you back from making the money you know you’re capable of earning is vital in reaching your profit goals. It could be a lack of an important leadership skill, or a problem with your sales team. It might have to do with marketing or branding.

The issue may also be personal: Are you emotionally holding on to something that’s stunting your business’s growth? Have you been holding on to limiting beliefs? Once you’ve identified what is stopping you from your plan to increase profit, you can seek out the personal or professional guidance needed to break through your barriers.

4) Value Your Time

Business owners can often undervalue both their services and their time, this risks minimizing profits. Setting appropriate prices for both your service and time is as important as delivering the service or product itself.

It’s also good to take into account your time as the business owner when it comes to lower-value activities. Sam Pillar, CEO of scheduling software provider Jobber advises “Running a small business is an all-encompassing world — once the company starts to grow, the biggest mistake people make is spending too much time on essential, but low-value activities. A great example is things like payroll, accounting, invoicing, scheduling — all activities that are essential, but can often consume way too much time for a business owner, the employees, and their office staff.”

Think about automating some processes to speed things up, or giving roles that you know you don’t need to manage yourself to other members of your team.

5) Manage Your Team

Pillar says, “For many small businesses, the single biggest expense is people. Salaries and related compensation is only one-factor employers need to consider; the time and effort those employees consume can spell lost revenue and profitability for business owners if it’s not spent efficiently. In service-driven companies, especially those that do work outside of their own offices, factors like drive time and fuel costs are fairly well understood today. As a technology company, we know that things like lost productivity due to inefficient communication between employees, leadership, and/or clients, the costs that come with running the business without the benefits of technology, and spending too much valuable time on essential, but low-value tasks all contribute to eroding your profitability.”

6) Track Your Progress

As you begin growing alongside your business, understanding your finances, and being more aware of how your team spends their time, monitor your results as your business progresses. Find out how to make a profit long-term. Dedicate time to team meetings to check in and reevaluate your progress as a company. This could be weekly, or monthly depending on your desired communication level and rate of company growth.

Tracking your progress allows you to evaluate what’s working for you and what isn’t. Gather feedback and refine your business approach. Taking a look at realistic goal setting could be useful if you find you’re consistently missing the mark. Ensure you’re focusing on the right areas. As you progress, adjust your goals and watch yourself and your business grow!