➔;What are the current figures
for your income, debts, assets
Grab these numbers from your bookkeeper, bank account or financial records.
They should be easy to find. (If they’re not,
it’s time to take a further look into the way
your finances are organized!)
Dig deeper by looking at the ways they
relate to each other. For example, maybe
you realize that a lot of your income
goes toward paying off debt, and you
should dedicate more to paying it off more
quickly. Or maybe you are bringing in a
high amount of revenue, but you’re also
spending a lot of money every month on a
studio space, employees and other miscellaneous expenses. Perhaps you’re in the
opposite position where you have a lower
gross income, but don’t have a studio
space or employees so you have minimal
➔;Is there a big gap between your
current income and your goal
Now that you have SMART financial
goals and a clear understanding of your
current financial standing, you can start to
connect the two. How long will the jour-
ney be from where you are now to where
you want to end up?
For example, are you almost to your goal
and just need a push further in the right
direction? Or after further analysis, have
you realized that you have a long road
ahead of you to reach your goals and are in
need of a major financial makeover?
What’s currently keeping you from
reaching your financial goals?
Now that you’ve run the numbers, you
can start applying the following best
practices in ways that make sense for
your unique business.
Cut the Fat
The most immediate change you can
make financially and start seeing results is
to “cut the fat” that’s accumulated in your
current spending habits.
Start by taking a look at your cost of
sales and expenses. Is your COS percentage at 30 percent or lower of your gross
revenue? If it’s higher, your products and
| COUN TING YOUR BEANS |
continued from page 52
Ignoring taxes until
the last possible moment.
Don’t get blindsided when tax time
hits and you have a whopping
tax bill due! Each month (or
quarter), make sure you’re paying
appropriate estimated taxes.
Only your CPA can tell you what
these should be, but by paying
the appropriate estimated tax
throughout the year, you can
adjust payments accordingly and
minimize your chances of facing a
huge bill in April.
Not charging sales tax.
Sales tax law is tricky, depending
on your state (see page 68 for
more details), but it’s up to you
to know the ins and outs of when
and how much to charge. Penalties
aren’t pretty for non-compliance,
so do your homework.
It’s tempting to make decisions
about finances based on hunches
or what your peers are doing, or
to also easy to make fear-based
financial decisions. Resist the
urge—instead, use real numbers to
make the best business decisions.
Not consulting experts
for personalized advice.
One size doesn’t fit all when it
comes to business finances.
Whether it’s taxes, budgeting,
retirement planning, or a debt
strategy, consult an expert who
knows you and your business
and can give you fact-based,
Not saving a cash reserve.
Unpredictable situations will come
up in your business. When they do,
you’ll need a cash reserve to keep
your business afloat.