Many business owners may not want to be involved in their own small business’ finance. However it is actually very important for you to have a thorough understanding of the finances of your company. Find out why in this snippet of an interview between Dale Beaumont and sister and business partners Kristina Noble and Simone Babic. Kristina and Simone are two sisters from Melbourne who started Citrus, a web design and online marketing agency, which services the needs of some of Australia’s biggest companies.
Many business owners are content to leave the financial and legal aspects of their businesses to others, why do you believe it is so important to have a thorough understanding of these areas?
These are areas of your business that you need to pay attention to and get right. Make sure that you know and understand as much as you possibly can. At the end of the day you are liable for all decisions made, not your accountant or lawyer, they are simply providing professional advice. And don’t assume that they are always right, ask questions and make sure you have enough information to make informed decisions.
- On the financial side, know your numbers and set specific financial goals. Create a month-by-month projected financial plan that is broken up into your revenue streams, direct expenses and overhead expenses, tallying up to a profit and loss calculation. Have the twelve-month projection on the same worksheet with a total for the year. Track this every two weeks, entering the actual figures into the column next to the month you are in. It will give you a very quick and easy way of following your business activity, including revenue streams that are or aren’t performing well, what is happening with your expenses and overall profit/loss. You can also start to see patterns from month to month and it gives you an indication of where you need to be focusing your energy. Toward the end of the year you can compare your estimates with actual data and use this information to formulate your plan for the following year.
- Create budgets for all expenses too and ensure that these are communicated to the different departments of your business. This will help to keep your spending under control. You must know where every dollar is going out of the business and why.
- On the legal side of things, become what we call a ‘legal eagle’. Go over all contracts you need to sign with a fine-tooth comb. This is not an area to be lazy in. Many people never read the fine print, but you must read every term and condition carefully if you are putting your signature to it. Don’t be afraid to question clauses or to propose changes that suit you and your business better. If in doubt have your lawyer take you through the contract.
What do you love most about business?
We love the fact that it allows us to be creative. Having your own business means that the final decision, and responsibility for that decision, rests with you. This is such an empowering experience because it means that you are creating what you think is right for the staff, for the clients, for the suppliers and for everyone who touches your business.
Ultimately, the business is a reflection of your choices. The other aspect of this is that it gives us freedom. Not only in the sense that we can make our own decisions about what to do with our time, but also the freedom to direct the business.
If anyone can succeed in business no matter what their background or circumstances, what do you think holds people back from becoming successful entrepreneurs?
Business is generally a mystery to most people. They look at successful business people and think that they must have a hidden talent or something special about them. The biggest lesson I learnt very early on in business was that entrepreneurs are just normal people and once I’d realised that, I thought ‘If they can do it, so can I‘. By being involved in entrepreneurial networking groups you get the opportunity to meet other entrepreneurs which continually reinforces the fact that they are just normal people doing their thing and facing the same challenges that everyone does.
It all comes down to the way you think about yourself and what ‘mind power’ you have to back yourself. What I mean by that is that you have to believe in your vision, what your business is about and that you are capable of bringing the whole thing together. Being in business is a great exercise in personal growth as it always challenges you on multiple levels. For us, it comes down to the fact that we believe we are effective at making the right decisions. We make decisions with conviction and clarity and as a result it provides leadership and direction for our entire team. I guess the key difference is that business people have steep learning curves all of the time as they constantly strive to retain a competitive edge and stay ahead of the market. If they don’t, the business won’t survive.
There are therefore some characteristics that do make entrepreneurs and their businesses appear mysterious, but be assured that with some hard work and smart thinking you can learn and achieve anything.
For more of this interview and small business finance check out “Secrets of Female Entrepreneurs Exposed!“
