Financially disciplined businesses are the ones that succeed. Knowing how to manage your money and maintain a positive cash flow will give you and your employees a sense of security. It will also put you in a position to grow and potentially make even more financial gains.
If you want to make improvements to your business, start with a look at your finances. Consider the tips below for insight into how to establish and maintain a financially disciplined business.
Tips for Building a Financially Disciplined Business
1. Set Realistic Financial Goals
It can be hard to find the perfect balance when it comes to setting goals because you don’t want them to be too easy or too challenging. Reaching a goal should mean that your business is in a healthier place than when you set the goal. Try to set financial goals that are realistic and achievable, but also better your business.
Once you have set your goals, plan out actionable steps that you can take to reach your goals. Ask yourself: How can I make small changes that will eventually make a big impact? This strategy will make your goals feel more manageable.
Be sure to check in monthly to measure your progress. Just like budgeting, monthly check-ins will help you stay on track. These brief meetings will help you correct any missteps before they become major setbacks. The check-ins can also serve as motivation once you start to see the improvements that you are making.
2. Leverage Forecasting
Using forecasting in your business is extremely beneficial. Forecasting is the practice of making predictions about a future event or trend.
When you leverage forecasting, in return you will:
- Mitigate risk
- Have a guide for budgeting
- Optimize your business’s performance
To utilize this strategy even further, run multiple forecasts based on potential scenarios. This is called serenio planning and is an efficient way to stay prepared for multiple possibilities within your business.
Once these are created, you can use them to make informed decisions about the future of your business.
3. Set Your Eyes on the Future
After you have created your forecasts, you will naturally start to think about the future.
What is your 1-year, 3-year, and 5-year plan?
Vizualize where you’d like to be and then transition into creating plans to get there.
As you are thinking about the future of your business, remember that your actions now affect the business in the long term.
- Be cautious and thorough in decision-making.
- Leverage your data when you need to make a difficult choice.
- Connect your current actions with future outcomes.
Your intentionality and future-focuesd approach will help your business grow into what you hope it will be over time.
4. Set a Budget and Stick to It
One of the best ways to practice financial discipline is to use a budget.
Budgeting involves tracking and recording all of your expenses, so you can learn how and where you’re spending your money.
Through budgeting, you will be able to effectively monitor your spending and your savings. This practice will help you become more aware of how much money your business needs to operate, and will help you to avoid any unplanned and unnecessary purchases.
Budgeting does require continuos maintenance. You will want to check your budget monthly and quarterly (weekly in some cases) to ensure you are on the right track.
These check-ins allow you to pinpoint potential problems and make adjustments before they grow into larger issues.
5. Focus on Paying off Debts
If you don’t have debt, great. If you do, start focusing on paying that off as soon as possible.
Paying debt (and interest on your debts) can really affect your business’s cash flow and financial health, so try to eliminate this extra payment each month if you want to build a financially stable business.
Discipline in this area now, will payoff down the road.
6. Actively Review and Manage Cash Flow
In any business, cash flow is essential. You need to be trending in the right direction to have a financially healthy business.
If you want to set your business up for success, focus on building cash flow and putting your business in a position to be successful today and five years from now.
Regularly reviewing and managing your cash flow is a habit that will help you build a solid foundation for your future.
7. Meeting with Your Accountant on a Regular Basis
Your accountants know and utilize countless strategies for building a financially healthy business. If you tell them that you want to be more financially disciplined, they can guide you and hold you accountable. Meet with them regularly in order to get professional feedback and ultimately reach your financial goals.
If you don’t have a trusted accountant, reach out to Pasquesi Partners. We can set you up with a team of professionals who know how to build a financially disciplined business.
Contact us today to learn how we can help your business grow!