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For my whole career I’ve been telling people that they absolutely need a family or household budget to manage their own personal finance. It’s the best advice I was ever given, and the most common piece of advice I pass on. Knowing where your money is coming from, and where it’s going to, is absolutely crucial to getting control of your finances and building wealth.
That’s a mind-set I’ve always taken into my small businesses also. Because even though they run very differently, I often see very similar parallels between a business’ and household’s finances. And just like Libby and I have done every month around the kitchen table, business owners should be sitting down monthly to adjust and set their budgets. Once you’ve done the heavy lifting, a good budget will practically run itself. Your business will be in a better financial state and you’ll be comfortable with the transparency in your cash flow.
Some of the budgeting strategies I’ve always been a fan of are equally as applicable to the business too. A few of my favourites, for example, are definitely transferable;
- Bring back the art of negotiation. Whether it’s your bank accounts, insurance policies or stock from suppliers, it pays to ask for a better deal.
- Cutting your energy bill can be a huge cost saver to the business. Sometimes it’s the little things that can lead to the biggest savings, so get your business to start forming good habits when it comes to your energy usage.
- Automate everything. We all make mistakes from time to time. So when it comes to the process-driven side of your finances, let a robot worry about them. Set up automated withdrawals for things like repayments or bills that you know won’t change. Nothing’s worse than a late fee because you forgot to pay a bill.
- Continue to shop around for better deals! Even though you’ve got your direct debits set up, make sure you keep looking around. More often than not it’s worth the time to switch providers (and easier than you’d assume) and could save your business loads.
Small Business First and Fairfax Media may earn a commission on deals through smallbusinessfirst.com.au.
Readers should shop around for the best deal to suit their needs. Pinstripe Media, David Koch's family business, is a founder of Small Business First.