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Four Tips For Organizing And Managing Your Company’s Finances

 

It’s a sad fact that over 90% of small business owners don’t have accurate, dependable, and up-to-date financials. There used to be a lot of excuses for this: Organizing your numbers was time consuming, complex, and expensive. Small business owners and entrepreneurs could either hire an accountant, or simply ignore the financial side of their businesses (until absolutely necessary). Fortunately, this is no longer the case. These four simple tips can help entrepreneurs get organized and manage their businesses more effectively than ever before.

Take advantage of today’s technology

Instead of going full-bore with an accountant or heavy-duty software, there are a number of “third path” options that rely on easy-to-use technology. Companies like BodeTree have simplified the entire process by connecting directly to bank and credit card accounts—providing real-time insights into business financials like cash flow and valuation. There are other solutions as well, such as InDinero and Bench, which add a human element to the process by connecting you with a virtual personal bookkeeper.

Review your numbers every week

Too many small business owners think about their finances only when it’s time to pay taxes. The problem is that important decision points occur organically, not just around tax season. One solution is to set aside time each and every week to review your finances. It doesn’t matter if you’re simply checking your current cash flow situation or reviewing your performance relative to a peer group. The important thing is that you’re making financial management part of your routine. While it may seem tedious at first, staying on top of your finances will pay off in the long run.

Use the FOGS framework when evaluating decisions

The vast majority of businesses struggle to make data-driven decisions. The FOGS framework can help change that. FOGS stands for Finance, Operations, Goals, and Strategy. When making a decision, think about the financial impact, how it will affect your operations, whether it furthers your goals, and if it aligns to your strategy. This framework is at the core of every successful business, whether they know it or not.

Never lose sight of the big picture

Every entrepreneur is looking to maximize value. While the definition of value can differ from person to person, more often than not it’s the financial value of the business that entrepreneurs really care about. Financial value represents the culmination of everything that is going on in a business: where it has been in the past, where it stands today, and where it’s going in the future. Keeping an eye on the big picture of your business can help you stay motivated and engaged in managing your finances.

The bottom line is, while finance and accounting are boring, their applications don’t have to be. Today’s entrepreneurs can leverage technology to handle the grunt work of organizing their data so that they can focus their time on using that information in their business. Organized finances will lead to better decisions, better communication, and better results for startups and small businesses alike.