Just like in life, running a small business comes with its own challenges — especially in the area of finance. Here are 6 tips to overcome small business financial beliefs.
Small Business Financial Beliefs
1. I don’t know what I’m doing.
Let me ask you this. Did you know exactly what you were doing when you first started your business? Did you have to learn some things along the way? Were you scared? Were you overwhelmed?
Yes? I thought so.
If you can overcome the fear of starting a business that means you can also overcome the fear of the books and the idea that numbers are complicated. Take baby steps to put that fear aside and learn the basics when it comes to numbers. There’s software to help you. It makes it so much easier when the software is there to help you.
I’m here to tell you to believe in yourself. Trust that you can learn and grow. Watch tutorials and training videos. Buy a book. Use the help section in the bookkeeping software to get your questions answered. In other words, use the tools available for free to help you get at least the basics down.
We all have fears to overcome. I believe in you.
If you learn the basics, you can outsource the rest. Or possibly hire a professional to ask more questions or to take over the numbers for you. When things get beyond the basics, it’s time to outsource and get help. You’ll know when you get there.
Start at the basics. Then hire a good bookkeeper and tax professional. If you don’t know the basics, how are you going to know that your bookkeeper is doing a good job and accurate?
Remember as a small business owner you’ll wear many hats. The financial hat is just one of the many.
As you read through this list, I’ll share a few suggestions to help relieve the anxiety and overwhelm. Remember. Baby steps will help you overcome small business financial beliefs.
2. Relying on your memory
We all think or maybe wish we could remember everything. In reality, that’s not the case. As time moves on, we forget. It’s normal.
Do you really think you’ll remember what that expense was for in 3 months or 6 months or 9 months? If you don’t enter into accounting software or keep a note somewhere with all your other business financial information, will you really remember you bought that item?
Do you remember what you had for dinner last Wednesday night? No. I didn’t think so.
If you can’t remember that, then how are you going to remember what you spent money on last month that counts as a business write-off?
Avoid the extra headache and keep a folder (electronic is fine) for all business receipts, expenses, etc. Better yet in the parking lot when you leave the store, open Quickbooks on your phone and snap a pic. Now that expense is already in your books. It’s THAT simple.
Wouldn’t you rather focus on your business and not the numbers? Free up your mind to do just that. Eliminate the anxiety and overwhelm.
Plus, you now have the receipt necessary to defend that write-off. No more questioning and remembering what deductions apply to your business. You have the data!
Don’t rely on your memory and you’ll have overcome one more small business financial belief.
3. You dislike numbers
I get it. I’m the weirdo that actually likes numbers but I realize not everyone is like me. For some people numbers make them cringe and therefore, they ignore them. Procrastination happens and then it becomes even more overwhelming.
I’m here to tell you that these numbers shouldn’t be scary. It’s not complicated math. There’s calculus involved. I promise!
If you type numbers into a spreadsheet or software, then you’ll be able to handle your small business finances. No more procrastination. Face the numbers head-on.
Nowadays we have computers and calculators to do the simple math for us. So, what are you waiting for? I recommend you set aside 15-30 minutes each WEEK to work on your numbers. Once a month you can take a deeper dive, but completing all the weekly tasks will make that deeper dive easier.
That way you won’t feel as overwhelmed and you’ll be setting a habit as part of your week.
Embracing the numbers means overcoming one more small business financial belief.
4. Numbers are for taxes
If you believe numbers, deductions, expenses, and income are only for taxes, think again.
Yes. Knowing your numbers certainly makes filing your taxes a little quicker and easier. You’ll have all the numbers needed to complete the tax return.
Your business finances serve many other purposes besides tax return preparation.
Here’s the rundown on how your business finances can help you on a weekly and monthly basis. You can:
- see what’s selling well and what’s not.
- review unpaid invoices and inquire or remind your client to pay. It’s a great time for a check-in. You can also stop work if an invoice is unpaid and you have a written contract.
- double-check your expenses and catch unnecessary items.
- determine your net profit. This helps you understand if you’re charging enough for your services/products and also allows you to save for taxes.
- celebrate hitting goals. Knowing the numbers allows you to view accurate reports. It’s important to celebrate the wins. Plus, you might have set some financial goals and it’s exciting to accomplish them.
The above list is not all-inclusive. There are more reasons to keep books clean and know your numbers. The numbers are there to help you grow and manage your business. Use them.
If you wait until tax time to update your books, then you’re missing out on the detailed information clean books can provide you throughout the year. Not just once a year.
Remember your goals. Know the numbers throughout the year so you can nurture your business.
One less small business financial challenge.
5. I have more important things to do
We already discussed that the numbers provide important insight into your business. What’s more important than knowing if something isn’t selling or you’re spending too much on something?
While I understand, there can be urgent tasks on hand. Helping resolve an issue for an unhappy customer is a high priority. I’m not saying otherwise. I’m simply stating that putting off the books to deal with all the other everyday tasks isn’t a smart idea.
Instead, numbers and your business finances should be a part of your weekly and monthly normal business tasks.
What’s more important than knowing that you’ll be able to pay your bills including your employees or contractors next month? If you don’t look at your finances and keep them up-to-date, then how will you know you have enough cash to do that?
You see my point. Staying on top of the numbers is one of the important tasks for your business. Don’t ignore it. Don’t procrastinate. It could hurt you in the long wrong and cause more stress later.
Take, for example, a taxpayer who doesn’t know their business numbers. However, their business did well. They had high profits and kept spending that money on whatever they wanted business and/or personal items. Now tax time rolls around and they are given a surprise tax bill. They didn’t save or prepare for a future event (taxes). Now what?
The tax bill is an urgent matter that could have been addressed throughout the year by reviewing the numbers. The taxpayer could have put aside the money for taxes in preparation to pay vs. spending it. This is a common problem. Many people see money in a bank account and say woohoo. I have $xxx to spend on whatever I want.
Get the idea here? I’ll say it one more time.
Staying on top of the numbers is one of the important tasks for your business.
6. Help is too expensive
Earlier I talked about an entrepreneur or small business owner wearing many hats. While that’s true, it’s also okay to outsource some things to relieve some stress.
Too many small business owners try to do it all themselves thinking help is too expensive. This can result in burnout, stress, and total exhaustion.
Don’t let it get to that point. When your business can afford it, outsource.
I find this particularly true for the tasks you don’t enjoy doing yourself. If you free up some of that stress, you’ll have more time to do the things you enjoy. What would you do with a little extra time? Spend more time with your family? Read books? Take a hike?
Help can be in the form of a marketing guru or a virtual assistant to help with social media and replying to emails. It can be an outsourced bookkeeper and tax professional.
I think you’ll find that most businesses that outsource the numbers including bookkeeping and taxes free up their time and relieves stress.
A great financial team can help catch all your deductions meaning you pay fewer taxes. They can also help advise on tax savings and give planning tips throughout the year. If you wait until tax time to do tax planning, you’re too late.
Did you know that 40% of small business owners said they spend over 80 hours a year on bookkeeping and taxes? The majority of small business owners said they spend more than 41 hours on tax preparation each year. Ouch! Talk about stress and anxiety!?!?!
You can free up that time and mind space when you outsource the books and tax return preparation. Trust me. Sometimes it’s better to pay an expert and not try to do it all yourself.
Pass off at least one hat to someone else you trust. I think you’ll thank me once you feel the stress relief.
Build the outsourcing into your budget and hopefully, you’ll have overcome one more small business financial belief.
YOU CAN DO IT!
I believe in you. Take one step at a time.
If you want a successful business, then it’s super important to start looking at your finances. No more procrastination. Take the time to learn. Outsource when you’re ready.
These challenges can be overcome.
Now is the time to overcome those small business financial beliefs.