Running your business is rewarding, but it comes with various challenges, finances being one of them - especially when the economy has gone wild and numbers simply aren't your thing.
Whether you're a freelancer struggling to keep your business afloat or a seasoned business owner trying to navigate unpredictable economic times, handling finances for your business is crucial but can feel daunting.
In this blog post, I'll share a few tips on how you can manage your finances during periods of economic uncertainity
Create a Financial Plan
One of the most effective ways to navigate any kind of uncertainty is by creating a plan. A financial plan helps you forecast your business's income and expenses and make decisions influenced by the right information. Knowing your short and long term goals is a helpful place to start, from there you can evaluable your current financial position, and identify any risks your business might be up against.
Most accounting software will allow you to run reports and track your performance - but a spreadsheet will work too! The key is to be able to see your income and expenses so that you are able to make decisions at every stage, and see where you have opportunities to reduce costs or maximise your best income streams
Have Financial Reserves
It is always good to set aside a portion of your revenue to create financial reserves in anticipation of uncertain times. Having a financial reserve can help you cover sudden expenses, unexpected costs, or a downturn in business. I recommend aiming to have three to six months' worth of expenses set aside as a reserve.
Stress-Test your Business
err what! I hear you
Stress-Testing means developing a set of scenarios and projection the impact they would have on your business.
Consider how your sales, cash-flow, and any stocks would be affected by circumstances such as; loss of a big client, a rise in price of stock items etc
This helps you prepare for potential financial challenges and make appropriate adjustments to your budget, stock and marketing strategies
Maintain Relationships
Relationships matter, and no more so than in uncertain times. Doing what you can to keep in favour with your bank and suppliers will help you face an unforeseen situation.
Banks are more than willing to lend money to businesses with good credit scores, similarly good relationships with suppliers can help you negotiate better payment terms, repayment plans or discounts to help you manage your cash flow.
Stay up to Date
Staying up to date on regulations and laws relevant to your business is essential at all times, but avoiding costly mistakes might seem even more important when the economy feels more difficult.
A great bookkeeper or accountant will always keep you up to date on anything that may impact your business finances.
So does a Freelancer need a Financial Plan ?
Managing finances at any time can be challenging, but can made harder during uncertain times, but it is not impossible. By creating a financial plan, establishing reserves, stress-testing your business and remaining good relationships with your bank & suppliers and by getting the support of an expert bookkeeper or accountant, you have the best chance of navigating financial uncertainty and taking care of your financial health.
Preparing for your future is always more advantageous than reacting to it, so start planning your business's financial future today.
If you'd like to talk to me about how I can work with small businesses like you, book a free chat here; Coffee & Chat
For more tips to help with your business finances ..
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