No business intends to be in the red, but it can quite easily happen, and your finances can quickly spiral out of control if you let things slip. Keeping on top of your finances is one of the most important things in business. If you don’t have time, outsourcing your accounts to a bookkeeper is well worth the investment to keep your business on track.

Every entrepreneur wants to be successful, and by successful that means making a profit. To make a profit your cash flow must be on the rise. You may be bringing in lots of sales but are they profitable? Are you charging enough? Your outgoings must be less than your income in order to make the profit you are working so hard for. 

Here’s our top tips to ensure your business finances stay out of the red;

Business Plan

Before even starting out in business, you should have a business plan. Not only will this help when seeking financial assistance such as business loans and grants but it will help map out your goals in order for you to grow your business. Having a target to aim for will give you the motivation and drive to plan out the steps you need to take to achieve your business goals. This will ensure that you’re heading in the right direction to stay out of the red!

Spreadsheets

Spreadsheets may be old school but keeping a record of all of your incoming and outgoing transactions will ensure that you are aware of your financial status. You can also use spreadsheets to forecast your profit for the rest of the year, setting yourself targets that you can monitor.

Contingency

It’s OK putting budgets in place, but what happens when something unexpected happens? Keeping money aside for contingency when these things arise means that you don’t have to go into the red in order to overcome these hurdles. Your Tax may be one of these things! Make sure that any profit you make you save at least 1 third to pay your tax bill at the end of the financial year. The last thing you need is to have to go into your overdraft in order to pay the tax man.

Review costs

As bookkeepers’ we always review our clients spending to help them save money and cut back on costs which really aren’t necessary. It’s surprising how many businesses have transactions coming out of their accounts each month that they either don’t know what they are for, or just haven’t had the time to cancel subscriptions for things they don’t use. Every penny counts in business, so review your subscriptions at least every 3 months to make sure you are making the most of the things which you are paying for. If the subscriptions aren’t essential to your business and you feel that you aren’t getting value for money then get them cancelled! AT LJM Bookkeeping we also ensure that our clients are paying as little as possible for their outgoings, whether that be utilities, software subscriptions or negotiating with suppliers, we have a directory of contacts in order to help you keep costs to an absolute minimum. 

Nurture your clients

A pivotal part of your business is your customers. You’ve got them onboard but you need to nurture and look after them to ensure you get repeat business. The most successful way of marketing your business is via word of mouth. A happy customer will talk about you to their friends, acquaintances and associates and may even write you a great review on Google or Social Media, so make sure your customers are well looked after, you need that money coming in!

So now you’re making sure that you’ve ticked off these 5 points but you need to monitor and maintain what you’ve put in place. Doing your books can be a full time job in itself but it’s something that can’t be overlooked. At LJM Bookkeeping we use cloud software so that our clients are kept up to date and can see their financial position in real time. This means that all of our clients can make accurate and important business decisions based on their current cash flow circumstance. No waiting around for answers, just a simple login from wherever they are and hey presto they can make a decision. If you need support to keep you out of the red, or even get you out of the red, then please get in touch, we would love to help your business with our ACE (Accuracy, Continuity, Efficiency) Bookkeeping service .