“I work all night, I work all day to pay the bills I have to pay. And still there never seems to be a single penny left for me.” If you’re a bit of an ABBA tragic like me, chances are you’re familiar with these lyrics.
Sometimes running your own business starts as the dream, and then the reality of making ends meet turns it into more of a nightmare.
You’ve probably heard the old cliché that ‘cash is king’. I’d actually like to take issue with and declare that ‘cash flow is the true king’. When running a small business, cash flow is paramount, and the lack thereof can be severely frustrating.
Watching others in business splurge before the end of financial year to save tax may even bring on a touch of the green-eyed monster, especially when we’re not in a position to be able to do the same. But don’t worry – chances are nearly every small business has had cash flow issues at some stage, and some sleepless nights while becoming a profitable enterprise.
I Have a Plan…
Depending on what business you’re in, sales can be seasonal, or you have some much better months than others. If you’ve been going for a few years, check your historical data in your accounting software tool or system and see when your highs and lows in income traditionally fall.
If you’re in financial services, just before the end of the financial year is the best month for you; retail may be November and December; spring months for wedding and baby services; July to October for bookkeepers and accountants, with quarterly spikes for BAS returns.
Conversely, there will likely be times when things are much slower. Building services and offices traditionally shut up shop for part of December and January. Take a look at what happens for you.
Can you use the slower months to launch some marketing or sales campaigns? Is it time to get on top of some social media advertising or do other activities to stimulate sales when you know it will be a little quieter?
Also, quick invoicing is key to maintaining healthy cashflow, which can be easily managed through software tools such as QuickBooks Online. Falling behind on your invoices by taking notes to action them later can leave you without income for periods of time, which you want to make sure you avoid. So software can assist here in producing and sending off invoices instantly and on your mobile right then and there so nothing slips through the cracks.
All the Things I Could Do…
Chances are you know when your big expenses fall due. Insurance premiums, extra wages, utility costs and higher stock needs. Again, check your monthly data, whether through QuickBooks Online or another tool, and watch for the pattern to emerge.
Are you able to start smoothing some of the spikes? Can you ensure big bills aren’t due in the quiet months? Can you allocate more profits from the good months to future bills? Are you able to change when the annual payment falls or adjust payments to half-yearly or quarterly?
If it’s really tough, sort your bills into the ‘must pay’, ‘important to pay’ and ‘flexible options’ groups. Prioritising expenses is a great plan!
Another top tip is to invest in a payroll service if you don’t already have one. Accounting for wages, superannuation, GST and other taxes can take a lot of time, especially for the already time-poor business owner, but a good payroll service can be invaluable. You’ll always know exactly where you stand and how much to allocate to cover costs. Check out the benefits of QuickBooks Online payroll services and see what benefits it can bring to your business.
Things can get a little rough in small business and learning a few tricks to keep your head above water will help you stay positive, maintain focus and in control enough to turn a healthy cash flow once again. It may also mean you don’t need to go to Las Vegas or Monaco and win a fortune in a game.