Master Your Business' Financial Life (Even If You're Not a Financial Expert)
By Gina Blitstein
Business owners bring a wide variety of skills and talents to the table. Other than passion and dedication, however, there are few requisite qualifications for owning a business. Although it's a good idea to be invested and literate in good business practices, if you cover all the bases with self-education, experience and competent people, you needn't be an expert in every arena. Even in the exceptionally important area of your business' finances, so long as you take responsibility, you can be fiscally successful without being a financial expert.
It's important to master your business' finances in order to run your company to its highest potential today and to prime it for future growth. The two most important facets of taking charge of your business' finances are to:
- Take the wheel...learning and seeking the financial advice you need but don't possess yourself.
- Communicate your financial goals in order to propel your business forward.
Take the financial wheel
Even though you may not have a degree in finance - or even extensive experience with the subject - as owner, you are ultimately responsible for your company's bottom line. That's why it's incumbent upon you to take charge by making these actions a priority:
- Learn all you can about the finances of your particular business. Make it your business to know the basics of your company's expenses, operating costs and income and (at least) enough to know what you don't know.
- Consult/bring in those who are experts. When you identify the holes in your knowledge and abilities, hire a strong team of professionals to inform and advise you. A team consisting of an accountant, attorney and insurance professional will serve you well and will have your financial back.
- Ask your financial advisors to provide reports for your edification. This is the intel (a Profit and Loss Statement, for example) you need to maintain a strong grasp of your company's overall financial condition. Ask questions about these reports to gain perspective and insight from your team of experts.
- Remain attentive to and informed about the numbers. These reports will indicate the financial health of your company - for better or worse. Pick the brains of your experts to learn why changes occur and how best to respond to them.
- Take your professional team's advice - Even if your team reports news you don't want to hear, don't ignore or second-guess them. You've hired them to protect your interests so trust their information and heed their recommendations.
Communicate your financial goals for business growth
Having a strong grasp of where your business stands financially is empowering in itself. It becomes an even more powerful tool when used to influence those who can help your company grow. Employ these tactics when choosing banking products and approaching lenders for the tools and capital you need to propel your business forward:
- Develop a professional network. Rather than going it alone, learn from a strong and varied network of professionals who share your business goals. You can learn a lot of valuable tips and techniques from others who have successfully dealt with financial institutions.
- Nurture a relationship with your business banker. Like any important relationship, it's best to pay attention to it and avoid neglecting it for long periods, lest it wither. Don't just see your business banker when you need money. Make it a point to attend functions and events in which you can network on a more casual basis so he or she can get to know the person behind your company.
- Develop a strategy for attaining your goals. Utilize your financial intel to develop a simple yet workable strategy for attaining your business goals.� When developing your strategy, anticipate questions from potential lenders like these: "How much money will you need?" "How will the loan proceeds be spent?" "How much profit do you expect to see as a result of your expansion?" "How will you repay the loan?"
- Prepare thoroughly to meet with lenders. Regardless of that personal relationship with your lenders, it's important to be thoroughly prepared with financial statements, complete plans and projections when meeting with them. Your enthusiasm can only be contagious when backed up with facts and numbers.
- Project confidence. Although finance may not be your forte, as the face of your company, it's important to be emboldened by the financial information you can gather to make a confident pitch to potential lenders. The sense of confidence you demonstrate in presenting your goals and how you plan to get there will go a long way toward encouraging lenders to work with you.
To business owners whose skill set lies elsewhere, it's good news to know that you don't need to be an expert to master your business' finances. It's an extension of your professional dedication to take on responsibility for the money aspect of your organization as best you can. By taking charge of the factors that make up your business' finances, you gain insight, power and confidence that will take your company far.
How do you demonstrate mastery of your business' finances?