Running a business is exciting, but it can also be messy, especially when your finances aren’t under control. Many business owners think poor sales are the main cause of money problems, but the real issue comes down to poor habits or mixing business and personal funds. If you’ve been feeling stuck or stressed about money, here’s a way to get back on track and build a stronger future for your business.
1. Know Where All Your Money Goes
Start by checking your cash flow by looking at your business and personal finances. Remember, it is hard to manage money when you don’t know where it’s going. You’ll want to break things down by what’s coming in, what’s going out regularly, and those once-in-a-while expenses that still add up.
Use a spreadsheet or apps like QuickBooks or Xero to make it easy to see where you’re overspending or what costs you can cut. When you do this every week or month, you’re less likely to get caught off guard and more prepared when tax season rolls around or if you need to show your numbers to an investor.
2. Keep Business and Personal Money Separate
It’s tempting to mix your business and personal money, especially when things are moving fast. When your money is all in one account, you may miss out on tax deductions or get into trouble with the ATO. For you to keep things clean and well-managed, use a business credit card for work expenses.
Make sure your accounting software is only tracking business-related transactions. This way, you’ll have a clearer view of your profits, and it’ll be easier to plan or apply for loans when needed. According to a study, separating your finances properly can help avoid credit issues and audit headaches down the line.
3. Build a Budget and a Safety Net
Budgeting doesn’t have to be complicated; just make sure you’re setting aside money for day-to-day operations, marketing, wages, and growth. Build a savings that covers three to six months of basic costs to keep your business running smoothly even when unexpected expenses pop up. The ATO recommends putting aside money for tax payments so you’re not scrambling at the end of the financial year.
4. Clear High-Interest Debt First
If you’re dealing with multiple loans or credit cards, list them out by balance and interest rate. Focus on paying off the ones with the highest interest first; this is called the avalanche method, and it helps you save money. If you can, talk to your lender about better terms or consider consolidating your loans. Reducing your debt improves your credit score and gives you more freedom to invest in your business.
5. Set Financial Goals That Mean Something
Remember the goal. “It’s one thing to pay bills; it’s another to grow your business on purpose.” Use Pocketsmith to see how you’re tracking visually, and check in with your goals every few months so you can tweak things as you go. Goals keep you focused, and they help align your financial plan with the bigger picture you’re trying to build for your business and your life.
Your Finances Shape Your Future
Start small, and get into the habit of checking your expenses, separating your accounts, and paying off the debt that drags you down. These aren’t just money tips; they’re habits that support your peace of mind. When your financial house is in order, you can focus more on growing your business. The earlier you start, the better your foundation will be, and that makes everything else a whole lot easier.
