How many small business owners know their craft (in my case Kinesiology), but have challenges with finances? Looking back it has been nearly 20 years since I first developed a fear of numbers. The words “don’t take math again” have been etched into my memory since they were spoken by my grade 10 math teacher. Perhaps this new fear of numbers why I initially stared a degree in English and History? It was near the end of my first year of university that I discovered that I really wanted a degree in Kinesiology. The irony is that a Kinesiology degree has numerous courses that have numbers and computations as part of their curriculum.
Now as a business owner it is even more critical to be competent at understanding my financial numbers as well various key statistics that drive my business forward. This fear of numbers has previously prevented me from feeling confident enough to develop cash flow projections and budgets. I would much rather write, go play outside. update my website, go to the movies than sit down and complete cash flow projections however, I know they are important pieces to being profitable and running and an agile business.
What I think was missing from my financial education was how to properly manage cash-flow. One effective way to overcome a fear is to dive deeper into by seeking more knowledge and combining it with practical application. I found a couple of books that helped (see below) and started to in grain some weekly habits.
In addition have been working on switching the “I am not good with numbers” thought to something more positive such as “I am in the process of being competent at understanding and creating cash flow projections“.
A business exists to make money, no shame in that. For me I enjoy the independence, but I also want the business to support my lifestyle and family. There a few habits I am in the process of implementing to help my business thrive and strength my financial numerical literacy:
- Balance books weekly
- Complete weekly, monthly, quarterly and yearly cash-flow projections
- Added line items in the projections to pay off debt, pay taxes and pay myself
- Use the projections to what cash as to be on hand to make appropriate payments and know what sales have to be.
- Use the projections versus actual to make strategic adjustments, increase sales or decrease expenses
- Keeping all my receipts organized with Neat instead of in a shoe box!
It isn’t easy in the beginning, however the more frequently that these items are completed I gain more confidence in my financial management skills. This process also keeps me focused on creating a bright future instead of the berating myself for what has already happened.
- Unleash Your Cash Flow Mojo: A Business Owners Guide to Predicting, Planning and Controlling Your Company’s Cash Flow – Sandra Simmons
- Managing Cash Flow: An Operational Focus – Rob Reider & Peter B. Heyler