How to be Financially Savvy and Smash Your Business Goals in 2023

I hated maths in school. I took General Maths in Year 11 and 12 (the lowest level of maths in NSW, Australia). And I cried on a few occasions, trying to make sense of basic equations.

I unfortunately don’t fit the Asian stereotype when it comes to maths and science. I always struggled with it. For that reason, I was never switched on when it came to money either.

• Cashflow?

• Balance sheets?

• Revenue?

• Net profit?

• Tax?

All those things gave me the shudders and just the thought of any of those words would make me feel inadequate and out of my depths.

A year into running a business with many moving parts — I’ve learnt the hard way that I can’t just be a little ostrich and bury my head in the sand when it comes to money.

Regardless of how polished the website is, or how on-point the interior design of your shop front — if your business doesn’t have healthy cash flow, it might not be sustainable to keep running it in the long run.

If I’m not great with money, why am I writing this article?

Being financially savvy and smashing business goals isn’t something I’m naturally a boss at. I’m writing this blog post to benefit myself, as much as it might help anyone else.

Not everyone is born with a natural leaning to be an absolute boss with money (hello) — but it’s a skill that we can, and really should develop. As adults. And even more, as business owners.

Why is it important to be on top of your finances?

Being financially savvy is essential when running a business as it helps you:

• Make informed decisions

• Avoid unnecessary expenses

• Keep your business profitable in the long run

Here are some tips I’m going to be following this year (and trying my best to stick to) in order to become more financially savvy when running my business:

1) Set a money day each week/month, etc

Because I naturally don’t like the thought of money, I made it a “thing”:

• Dress in something that makes me feel great

• Head to a local shop after a swim / walk to boost my endorphins

• Sit down with a solid coffee to reconcile my books

The goal for me here is to have a sound understanding of how the business is doing financially, being well aware of all our expenses including:

• Fixed costs that go out every week like rent and staff payroll

• Variable costs like utilities, office supplies, venue hire costs, etc

Having a consistent routine — but making it “fun” via cafe hopping and rewarding myself with endorphin boosting exercise afterwards makes me actually look forward to my little money day date with myself.

Having a consistent money day gives me more confidence to:

• Keep track of my cash flow to ensure that I will always have enough money to cover our business expenses

• Find creative ways to generate more profit to ensure our business is growing and healthy

2) Monitor your cash flow & investments

Understanding your cash flow means understanding how much money you’re making minus how much money you’re spending. What’s leftover says a lot about your business.

Healthy cash flow means that you can keep running your business to serve your customers, clients, staff and bring in some profit to expand. Remember that you need to calculate:

• Tax payments & BAS

• Payslips & superannuation

• Rent & outgoing overhead costs too

Your net-profit figure (how much money is left after you’ve subtracted all your expenses) is more important than gross profit.

Setting a money day can give you a clear idea about:

• Where we’re spending on

• Where we’re making the most money

• Where we could potentially save

• & where we can invest more money to bring home more profit

Being strategic about investing money and simultaneously looking for ways to reduce costs without compromising the quality of our products or services is an artform.

Take out the time to build a solid strategy to increase your cash flow. Here are some examples of how you can be creative and strategic to increase your cash flow:

• Negotiating with suppliers

• Reducing overheads

• Exploring alternative suppliers or materials.

• Considering the long-term benefits and potential return on future investments

3) prioritise Planning for the future

In the first year of running my business, I was constantly reactive. Fixing problem after problem. Being reactive means I hadn’t planned or strategised for the future. I was thinking like an employee, not an entrepreneuer.

Entrepreneurs should see a very clear picture of the future. It’s important to protect that clarity and constantly make it the north star.

One of my goals this year is to prioritise planning for the future. This includes having a clear idea of my financial position, projections and growth.

It’s always important to forward thinking in business. You need to have an eye on the operations of your business as well as a clear roadmap / plan for the future by:

• Having immense clarity around your vision

• Doubling down on what you want to build and why

• Building an emergency fund

• Curating a long-term financial goal

• Setting a solid plan in place for unexpected expenses or economic downturns (multiple streams of income and an easily pivotable business model are key).

Hiring a financial advisor or accountant to help you manage your finances and make informed decisions can be super, super helpful. Think of it as an investment.

There you have it!

Three somewhat simple, actionable steps that works for a creative who hates maths.

I’ve come a long way when it comes to managing and understanding the importance of finances in my business.

I hope that these tips are insightful for you too.

I believe anyone can learn to be financially savvy — which is especially important when running a business.

Financial literacy is a skill that will ensure the long-term success of your business, and mine too.