We all know that health is wealth, but look at it this way, wealth is health – for your business. When we want to fit into those pants from last summer or decide this is our season for gains, what do we typically do? We change our eating habits, add more exercise to our daily routine, and make a plan to achieve our goals. Financial planning is very much the same. The culture right now is about getting a bag, but how do we make sure the bag is fully secured and profitable? Having tons of income is amazing, but it does not matter if you don’t know how to manage it. Our finances provide a health snapshot of our business. Here are a few ways to start your healthy accounting journey:
Develop a plan
We often don’t realize when need a plan, until it starts to get out of hand. The “happy weight” may go unnoticed until we go from 5 pounds to 15 pounds. Yes, we should’ve stopped when we first realized the changes, but we all have to start somewhere. First, we must address that we need to make improvements and create a plan to achieve our goals. How many times will we work out? What foods would we like to fuel us? How many hours of sleep do we need? We have to address our past habits, assess what we need right now, then take action. The same can be said for the $25 that was spent but not accounted for and somehow leads to thousands in debt. It’s always great to have a clear idea of what we want and how to get there to stop bad money management habits. Some things to include in your financial plan should be: creating a budget, planning for taxes, getting insurance, managing debt, figuring out how to pay yourself, and creating a succession plan. Make a plan and stick to it.
Work Smarter Not Harder
We’ve stuck to our routine, but for some reason, these 15 pounds are still here. Now we may need a little extra help to keep us motivated, to reevaluate our goals, and to provide educated advice to get our dream body. So we hire a personal trainer. In business, this personal trainer serves as your financial advisor. You might know your business better than anyone else, but finance is a whole different business in itself. It may seem simple but it takes a lot of time to perfect. Your financial advisor can help track and document your finances, allocate funds for investments, and spot expenses that can provide tax benefits. Not to mention, this is their field of expertise. They will provide valuable insight to help you stay afloat through unforeseen circumstances. Let’s leave it to the experts. Use your time to focus on other aspects to strengthen the business.
Say NO to the old routine
Everyone has had a “cheat day” that lasted longer than intended. Our inner voice may tell us to “Treat yourself” or “You deserve this” and the next thing we know we’re back to eating the entire bag of chips on the couch again thinking the gym will suffice for the extra calories. Remember, every bit counts. Treating ourselves can be a dangerous game to play if there’s no balance and harmony. It’s the same for your funds, don’t break the bank using your business funds for personal reasons. There may be a bill coming up or a new TV you have been eyeing for a while and want to dip in your business account “just this one time” to treat yourself. Sounds like a little commingling. Commingling of funds is simply treating your business’s money as your own. As small business owners, we are trying to make life work and may spend our business money without thinking anything about it. However, commingling has serious legal implications and you can risk losing your LLC’s or corporation’s liability by “piercing the corporate veil”. Remember, bad habits have critical consequences. The goal is to be a responsible and accountable business owner.
Measure your progress
We’re almost to our goal! We see the numbers changing on the scale and feel the difference, but how can we truly measure the impact? We admire before and after pictures, measure our muscles, count our calories, and journal how we feel. Be sure to track the changes to evaluate the effectiveness and vividly see your journey to success. If you don’t have data, it doesn’t count! Do the same with your finances. We’ve created our plan, set up financial accounts, and picked a bomb bookkeeper—now it’s time to record what’s actually happening with our money. How much cash on hand do you have? What amount is needed for inventory? Are you in compliance with tax regulations? It’s crucial to have an accurate record of your finances on a consistent basis. Always know where your business stands.
When it comes to your wellness and your finances, it may be overwhelming to balance goals, and challenges, without seeing immediate results. Taking the steps to establish a robust process and sticking it out from start to finish will increase long-term success. There is beauty and freedom in the structure that wellness and financial planning provide. It just takes a little planning, practice, and patience. Remember to trust the process.