Is Your Disinterest In Your Finances Affecting Your Business?

With the new year approaching, you are probably thinking about your future plans, especially when it comes to you and your business. You may want more customers, more money, or to expand your business with more employees. All of these things are possible, but avoiding your finances may be the thing that is standing in your way. Bookkeeping and finance may not be much fun, but it’s essential that you spend time reviewing it.

Who are your best customers?

This is not just about how much they spend; it’s also about how quickly they pay. If you a payment term of 60 days, but you can’t cope with the delay in cash-flow, then there’s not much point in you going after these customers. Equally, if your customer is a frequent but low spender, you can’t invest too much time in them either.

Where are your customers?

This applies to both geography and niche. If your customers are hard to find, then you may want to increase your marketing budget in order to find them. Furthermore, if your customers are far away from you, you need to think about the time spent traveling to and from the customer, as this is dead-time where you are potentially losing money.

What is your most profitable product or service?

Recognising the more profitable products/services is the best way to increase your cash flow. If you spend most of your time on products that bring in the lowest income, you will find yourself at a loss. If you know what makes more money, you know that you can afford to spend more time on it because you know that it will pay.

What’s your breakeven point?

Like every business, there will be customers who ask for a discount, or simply expect one; you need to be prepared for this. Calculating under pressure is never a good thing, and you are likely to undersell yourself if you aren’t prepared. Work out how low you can go and stick to it. It’s great that you may have a new customer, but if you aren’t making a profit, you are at a loss.

When it comes to finances, don’t ever rely on guesswork because if you do, you risk not making a profit, or worse, losing money. If finance isn’t your strong point, then you should ask the experts. Having a trustworthy and reliable accountant can make everything run a lot smoother. If you are on the lookout for a new accountant, please get in touch, and we will see what we can do for you and your business.