The Secret to Staying On Top of Your Business’s Finances

The Busy Life of an Entrepreneur

As a solopreneur and then a start-up founder, life is busy. I used to block out an entire day to do admin work, pay my invoices, use taxes, quarterly taxes, review my financials, make sure I had money to keep going, and see how much more money I would need to make it 6 more months.

I’d update the spreadsheet for the number of customers in my forecast, check if anyone churned, and close my books. Oh and I can’t forget trying to remember what transactions were 15 days after the end of the month, that was always exciting! ; )

One day isn’t a lot of time so naturally, it never worked out. Inevitably meetings were scheduled, and I’d end up scrambling over the weekend or the day that sales and use tax or quarterly taxes were due.

Sound familiar?

Reviewing Financial Data to Benefit Your Business

Inevitably I’d wake up on a Saturday morning worried. Before the rest of my family even got up I’d pull out my laptop and do the calculations. If I get X more customers, how close am I to breaking even? What was my burn again? How much of my expenses were recurring? Am I forgetting anything big like an annual insurance bill coming up??

I’d have to review my books and think through what changed from the last time I looked and what didn’t. All with the nagging question that I know my fellow business owners can relate to: What am I forgetting?

The stress was unsustainable. So what’s the solution? First, I set up a budget. That helped, it gave me a point of reference for what the numbers were suppose to be, but it didn’t truly make a difference until I started doing a rolling forecast. What’s the difference? I check it more frequently. If something changes, I cancel a subscription, hire a person or get a new set of customers. I spend 5-10 minutes once every week or so and update my revenue projection. It’s more current, so it’s easier to wrap my mind around: what is happening right now and are there any major changes to my plan in the next few months?

Every two weeks or at least once a month (depending on how tight cash is), I review my expenses versus the recent plan – just a quick check-in. When I’m just spending 15 or 20 minutes at a time, maybe an hour if I really need to dig into something, cash flow planning for my business was so much less daunting, not to mention less stressful.

How to Stay On Top of Your Business’s Finances

Here’s a deeper dive into what I like to do. During one of my 15 minute sessions, I make a few tweaks with expenses for my plan for the month – adding or removing planned costs and income as the business changes. If my cash forecast hasn’t changed too much, it’s all good. If there’s a problem, I’ll take a few more minutes or maybe even up to an hour to figure out how to solve that problem. Since I’m solving it in a proactive way, not a reactive way, it’s less stressful. I’m giving myself time to do something about it even before the close of the month, so I am making decisions on what to – and what not to – spend money on 20 to 30 days earlier than I would’ve been before (when I was waiting to look at close financials from the prior month). And 20 to 30 days makes all the difference in stress for me.

About halfway through the month I use a 15 minute session to review the prior month and make sure things turned out as I expected. ONLY 15 minutes you ask? HOW??? I use my secret weapon – AutoCFO software, which allows me to only spend time reviewing – NO time preparing the reports and analysis.

There may be unexpected expenses or reductions in expenses that move my cash needle. This may affect the choices I want to make the next month, do I feel I have the cash to invest in that marketing push? Do I have the resources to still plan on that new hire in three months? Are there any budgets I’ve already run out of at just 10 days in? Do I need to slow expenses or make an extra push for revenue to improve my cash position?

With these check-ins I know where I am, and I feel like my financial house is in order. And if I do have a problem, since everything is pretty tidy most of the time, it’s maybe an hour of time. It’s not a major overhaul every 3 to 6 months and a lot of uncertainty and worry in between, it is a few easy tweaks and a quick review every 15 or so days.

Look at Your Business Finances More Often for Less Time

Many people tell me they don’t have time to look at their financial data, and I get it. An entire day once a month was a lot for me, too. Too much!

I used to dedicate one day a month, but I would worry about my financials 30 days a month. Now I spend 15 minutes every 15 days and a whole lot less time worrying. Every time my brain starts that natural worrying pattern, I can simply open my financials take a quick glance and see that positive cash flow number or a known cash burn number in my forecast which was updated within the last month and breathe more easily.

Better yet, you can spend 15 minutes doing your own check-in or meeting with your bookkeeper to straighten things up, and then for your other check-in for the month sit down with a financial professional and have them double-check your tweaks and help you sort through any questions you have about investing in your businesses future, or forecasting cash flow. And let’s be honest, just taking the time to talk through your financials once in a while with an expert can be a huge stress/worry relief!