Ever felt like you needed to hide from your financials? That it was either too scary or too hard?

Knowing your numbers and making informed decisions for your business can help catapult your business rather than leaving you feeling crippled or making decisions that tank the biz!

In this episode of the Seriously in Business podcast, we dive into the world of finances with special guest and money mentor, Clare Wood. Clare shares her insights on understanding the numbers, and leveraging investments to propel your business forward. Get ready for a crash course in financial success!

Know Your Numbers and Understand Financials

One of the most critical aspects of business success is having a firm grip on your numbers. Understanding your financials ensures profitability and helps you make informed decisions. Don’t leave tax surprises for later; allocate funds appropriately each month to account for tax obligations. By knowing your numbers, you can avoid unpleasant surprises and confidently navigate through tax time.

Plan Ahead and Adapt

No one can predict the future, especially how the economy will effect business or the exact amount of profit you will make. But when it comes to making informed decisions for your business, having a plan and forecasting cash flow helps you to rely on the best available information possible, rather than just relying on your gut feeling.

Make sure to update your cash flow forecast (or start one!), ideally on a weekly basis, to gain insight into upcoming challenges and opportunities. This practice enables you to make informed decisions, adapt to market changes, and maintain a healthy financial outlook.

How to Know When to Invest

Clare highlighted four key types of investments that can propel your business forward. Let’s dive into each of these investment categories and explore the strategies that can help you make sound financial decisions.

1. Overhead Costs:

To start, Clare emphasizes the importance of reviewing and optimizing your overhead costs. These are the recurring expenses necessary to keep your business running. Conduct a thorough audit of your expenses to identify areas where you can cut back. Take a close look at subscriptions, utilities, office space, and technology services. Negotiate better rates or consider switching to more cost-effective alternatives. By reducing overhead costs, you’ll free up resources to reinvest in other areas of your business.

2. Revenue-Adding Investments:

Clare highlights the significance of making investments that directly contribute to revenue growth. These are initiatives or resources that have the potential to generate more sales and increase your bottom line. Consider investing in marketing and advertising campaigns, expanding your product or service offerings, or hiring additional sales staff. These investments are designed to attract more customers, improve customer retention, and ultimately drive revenue growth.

3. Brand Investments:

Building a strong and recognisable brand is crucial for long-term success. Clare emphasises the importance of allocating resources towards branding efforts. This includes investments in professional photography, a website, logo design, and visual identity. By creating a cohesive and visually appealing brand, you’ll enhance your business’s reputation and attract high-value clients. Remember, your brand is a reflection of your business, and investing in its visual representation can lead to increased credibility and customer trust.

4. Cost Reduction Investments:

Clare advises considering investments that can lead to long-term cost reduction. This might involve automating certain processes, implementing efficient systems, or embracing new technologies. By streamlining operations and reducing manual labour, you can save both time and money. Evaluate your business processes and identify areas where implementing new tools or software can optimize efficiency and reduce expenses over time.

Knowing When to Invest:

Timing is crucial when it comes to investments. Keep a close eye on your financials and use tools like cash flow forecasts to determine when your business can afford to make these investments. Assess your business’s current financial standing and consider factors such as profitability, cash reserves, and growth opportunities. If you’re uncertain, consult with a financial advisor who can help you evaluate the risks and rewards associated with each investment.

Mastering your money is an essential aspect of small business success. By establishing a routine, understanding your financials, and being adaptable, you can navigate through challenges and seize opportunities. With the right mindset and financial strategies, you can pave the path to success for your small business. Keep learning, growing, and empowering yourself on your entrepreneurial journey.

Disclaimer: The advice in this article is based on the insights shared by Clare Wood, a financial expert, during her interview with Jacqui Naunton. It is important to consult with a financial professional or advisor for personalized advice based on your unique business circumstances.

ABOUT CLARE WOOD:

Clare Wood is a money mentor, author, speaker and podcaster. She’s a qualified accountant (a CPA), but she’s not your average bean counter… she uses her money-making mentoring powers for good. Clare helps service-based businesses to scale, while creating a lifestyle they love. Clare Wood runs The Profit Academy, an online school created to help business owners increase their profits exponentially and she’s the author of Intentional Profit

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