It’s essential to be on top of your small business finances. This Financial Literacy Month, make it a priority.
Financial Literacy Month has been celebrated each April since 2000 as a means of improving the financial knowledge and habits of Americans. While the initiative mainly speaks to individuals, small business owners have a big stake in financial literacy as well – for themselves and for their enterprises.
In short, small business owners need to be literate about their company’s financials in order for their businesses to be successful. No matter how much of a non-numbers person you are, as the owner of a small business you’ve got to be on top of the financials. We know that for every accounting consultant in love with digits there are a handful of business consultants, photographers and personal trainers who’d rather hand-wash the laundry than sit down with the books.
As appealing as that laundry may be, ignoring your financials isn’t really an option. As well as being one of the top five mistakes small businesses make, it’s a sure-fire way to royally mess up your business. If you don’t know how much cash is coming in and going out, if you’re unsure of what’s owed to you and what you owe, you can’t possibly make the best decisions for your business.
Clearly, it’s important for small business owners to keep a grip on what’s happening financially within their company. Luckily, a quick review, or flash report, is sufficient on a daily basis. This snapshot of your business’ status is a basic one-pager of the key metrics that you are using to run your business and reports on cash flow, accounts receivable, accounts payable, personal and staff hours and year-to-date sales. Deeper examinations of financials are done on monthly and quarterly intervals, with the occasional audit being prudent.
If you’re an entrepreneur with a staff, consider offering employees and contractors financial literacy training about credit management and other money management topics. As the BBB says, “By giving employees the tools they need to succeed in their personal finances, you are giving your business the gift of dependable employees who aren’t distracted by personal financial woes.”
Not sure where to go for financial literacy help? Or even what sort of financial information you need? Check with your local Small Business Administration office. The SBA offers counseling sessions and other forms of assistance to small businesses and may have programs in your area. There’s also Money Smart for Small Business, a joint offering from the SBA and the FDIC, which offers free resources on insurance, record keeping, and financial management.