Top 10 tips to becoming a financially savvy SMME
RNEWS / 13 MARCH 2019 - 14.59 / PUSELETSO MODIMOGALE
Habits of financially savvy SMMEs
Businesses are failing all around us, and this can happen when entrepreneurs are not equipped with the necessary financial skills that would enable them and their businesses to flourish.
Open a separate business account
o Don’t confuse your finances by having your private and personal account together. You will be more tempted to spend if it is in your private account, as subconsciously, you and the businesses are not separate. If it is separate, there is more accountability for how finances are spent, and this is a healthy financial approach to have.
Set clear financial goals
o You will be more likely to work towards achieving financial goals if you actually set them. These should be set annually, along with plans on how you are going to achieve these goals.
Identify short term expenses
o Tracking your short term expenses is one of the key factors in making your budget work for you. You need to know how much you have spent each month so you can tell when you have overspent and why.
Minimise your fixed costs
o Examine your fixed costs and see where you can be prudent and save.
Hire a finance coach
o Never underestimate the value of a finance coach who can give you clear insight and direction on how to understand and improve your financial skills. Even if you have an accountant or bookkeeper, you need to know what to look out for, what to analyse and understand in order to keep your finger on the financial pulse.
Know your cash flow
o There are so many SMMEs who go out of business due to cash flow issues. Don’t be one of them. Plan ahead, ensure you are aware of potential risks, and follow up on outstanding payments timeously.
Build your money consciousness
o Understand your relationship with money, know your fears around money, understand your limiting beliefs about money and how your upbringing conditioned you regarding making money. Be the money magnet by being the energy you want to attract.
Be financially wise
o Make wise decisions with your finances. It is very easy and tempting to go out and buy your dream car after securing a big contract, but is this wise? Don’t make big decisions on a whim. Stay focused, and look at investing back into your business. This may also require you to look at your spending patterns as an individual BEFORE you went into business, and be honest with yourself. It may be your money, but if you make poor financial decisions, you may be out of business sooner than you think.
Know the value of your time
o What are you spending most of your time on? Have you actually done an audit of your time to see where you are spending most of it. Time is money, and you need to ensure that you spend your valuable time on activities that will yield the best return on investment. This also speaks to prioritizing your day, and shifting your non-core activities to another staff member.
Give back when you can
o Money is energy, the more you give towards good courses, the more you will attract it. There is power in supporting others monetarily and non-monetarily.
SAICA Enterprises Development’s Programme Manager, Puseletso Modimogale offers entrepreneurs her top 10 tips on how to become financially savvy and run an effective business.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER