1. Keep personal and business finances clearly apart
A business is a work of love, so naturally, many entrepreneurs regard their business as their baby. And like any parent, they want to make sure their baby is well taken care of — even at the risk of neglecting their own well-being. While there’s nothing wrong with investing in your own business, it can be a big mistake to blur the lines between your personal and business finances. Muddling the two can lead to more than just accounting complications, it can also skew your understanding of just how well your business is doing.
2. Watch cashflow, not just revenue
Top-line numbers like revenue can be so dazzling that entrepreneurs forget to look at more important numbers: bottom-line, nett profit, and cashflow. An eye-catching revenue of $10 million is hardly worth celebrating if it comes at an eye-watering cost of $9.9 million and you find yourself struggling to pay the bills. Ruthlessly watching your bottom-line is important, but so is making sure that your cashflow is healthy. Without a steady cashflow, you may find yourself trying to meet today’s expenses with tomorrow’s anticipated revenue, which may not always realise.
3. Have a budget for everything
This sounds simple and intuitive enough but some entrepreneurs overlook the seemingly small things. They build budgets for every major project without realising that smaller expenses, like stocking the pantry and even purchasing office stationery, deserve a budget too. Left unwatched, minor expenses can quickly snowball and negatively impact your financials.
4. Implement good accounting practices from the get-go
The existing Wage Credit Scheme, where the government co-funds eligible wage increases, has been enhanced. The gross monthly wage ceiling will be increased from $4,000 to $5,000 to encourage companies to continue sharing productivity gains with their employees through prudent wage increases.
5. Don’t rely on others to watch your finances
This may sound like a contradictory statement since we just recommended engaging an accountant, but hear us out. There’s a world of difference between enlisting professional help and relying on it to watch your finances. A professional accountant can put your books in order — and optimise them, even — but those are still your books. You need to actively monitor, understand, and make business decisions based on them.
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