3 Action Steps to Financial Management

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A small business owner’s management of key financial initiatives is directly tied to it’s level of success.

Business owners wear many hats, including that of the chief financial officer (CFO). Be sure to manage these key financial initiatives as a CFO would, or you could be putting your business in peril.

The owner of a growing company has plenty on his/her plate, but it’s important that a few key financial initiatives don’t get lost in the jumble.

Here are three for consideration:

1.   Make sure you have access to company bank accounts

And are monitoring cash flow regularly, and anticipating and mitigating any shortages by securing additional funding before it’s needed.

2.   Take charge

Of the annual budget to keep your company’s spending on track.

3.   Manage risk

by ensuring that the proper insurance coverage is in place and creating a process for contending with unforeseen financial impacts.

Any business owner knows that entrepreneurship is about wearing many hats. Even though your title may technically be CEO or President or Partner, as the owner of a growing start-up or a smaller company in the growth stage, you are responsible for taking certain steps that in a larger company would normally be handled by other executives.

One such are includes key financial initiatives that are typically overseen by the Chief Financial Officer, particularly in the area of treasury management.

Three key financial initiatives business owners need to be on top of: 

1.  Have access to all of the company’s banking information

While your company may have a bookkeeper or controller that prepares the financial statements, it is imperative that you, the business owner, have access to all of the company’s banking information. Even more importantly, you should be monitoring the company cash account on a regular basis, reviewing the transactions and balance online every several days or at least weekly.

Safeguarding the business is a key financial initiative that is the responsibility of the owner – you absolutely must make sure that the business has adequate cash to meet its monthly obligations.

By monitoring incoming and outgoing cash activity, you will have the data and foresight needed to successfully manage another key financial initiative.

2.  Establishing the necessary banking and funding contacts to ensure adequate cash flow.

When dealing with a start-up or small business, lenders and investors look to the business owner to set the tone for the company.

By being on top of your financial position – and staying ahead of the curve on cash flow – you are showing lenders that you are trustworthy, responsible, and a smart investment. Getting funding when you’re already short on cash is a whole different ballgame, and one you don’t want to participate in if you can avoid it.

3.  A third key financial initiative for you, the business owner, to be aware of is annual budgeting.

Though preparation of the annual budget would be the responsibility of the controller or bookkeeper, it is essential that the business owner review and approve the budget.

That way, you are in control of spending and can maintain a sustainable level of cash output, thereby safeguarding your business operations.

A final major concern that you as the business owner should be supervising is controlling the risks to which the business is subjected.

You are responsible for having the necessary insurance coverage in place, as well as the financial processes to mitigate any unforeseen events that may have an adverse financial impact on the business.

An ongoing review of insurance and financial processes is key as the business grows and developments occur. By always being aware of what’s going on, you’ll be able to anticipate and mitigate risks proactively, instead of putting out fires as they spark.

In summary, even though you may not be called the CFO, as the owner of a growing business, that is a role you must to some extent play. Take on management of financial initiatives like a CFO would, and guide your business toward a financially solid future.

Related articles:

Breaking Down the Set Up of Small Business Financial Records
3 Foundations To Maximize Cash Flow
What is Small Business Life Insurance?


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