Freelancers in all industries deal with the same problems due to the nature of their work. Typically, freelancers are solo work-from-home contractors that manage every aspect of their business. If you’re thinking of dropping your career as an employee to begin freelancing, consider the following obstacles you will need to navigate. Unfortunately, problems beget more problems, and a shaky foundation quickly leads to a crumbly business, and many regrets about starting in the first place.
If you’re like most small business owners, you spend the majority of your time managing daily operations, keeping customers happy, and looking for new ways to grow. Spreadsheets, cash flow analysis, and financial projections are probably not your first passion.
However, measuring profitability, creating realistic budgets, and planning ahead for the future are crucial to your professional success.
Follow these four tips to get a handle on the numbers, and take control of your business finances.
Move to the cloud
How much of your time do you spend hunting down financial documents, poring over spreadsheets, and tracking expenses?
Constantly searching for and trying to integrate scattered data makes it nearly impossible to close out the monthly books quickly and efficiently. Plus, reliance on spreadsheets is a proven liability. Research shows over 88% of all financial spreadsheets contain errors.
Manage your business finances faster and more accurately by moving them to the cloud.
Cloud-based financial management systems have several benefits, including:
- Integration with all your other operational systems for the quick retrieval of the most current data;
- Automation of daily financial processes so you can step away from spreadsheets;
- Efficient expense tracking that improves accuracy and reduces revenue leakage; and
- Easy collaboration with team members and stakeholders.
Conduct regular financial reviews
Experts agree that vigilance is key to effective business financial management. Each month, set aside time to review your balance sheet, profit and loss statement, and cash flow statement.
Regular monthly check-ups will give you actionable insights into your business performance and growth potential. This information is crucial for:
- Projecting future revenue, cash flow, and expenses
- Validating major purchasing decisions
- Anticipating and mitigating risk
You’ll need this key data, too, if you ever want to apply for a loan to expand and grow your business.
Bring a professional on board
On the surface, hiring an experienced bookkeeper or accountant may seem pricey, but their expertise could mean considerable long-term gains for your business.
A technical financial expert can optimize the efficiency and accuracy of your financial management, granting you peace of mind and added time to pursue growth opportunities.
Plus, most small businesses don’t need full-time professional help. Part-time services are typically enough to help you manage crucial processes, plus a few extras, including applying for a business loan or overdraft, articulating and adapting your business plan and managing sudden growth – for example, hiring new staff, acquiring office space, or determining when to introduce a new product or service.
Consider enrolling in a basic bookkeeping or accounting course so you can better understand the fundamentals of business financial management. The knowledge you gain will feel empowering, and can help clarify discussions with your accountant.
Self-education is also key when it comes to investing in financial IT. Be sure to do your research and consult an expert before investing in any new accounting solutions for your business.
Your knowledge, combined with professional support, is the very best route to sustainable, effective business financial management.