Setting up a new business is an exciting chapter in a franchisee’s life. The first and most important step is to make sure you have the foundations laid correctly. Here are 10 top tips for managing the finances yourself.

Getting it right from the first day sets the tone for any franchise throughout its life… meaning that profits could be a lot higher and success can become a constant.

Unfortunately starting a business comes with time-consuming and distracting, yet unavoidable administration including bookkeeping, tax and accounting all of which can be challenging.

However these things are fundamental, both in terms of keeping you safeguarded and in compliance in the eyes of the tax man and in presenting valuable data on which to run your business.

Over time, the money injected into the business will increase and things will be different. As the profits grow, it’s smart to have absolute control and visibility of your business, making sure that it’s set up in a tax-efficient way and you can make sound management decisions based on accurate, timely figures

However from the start it may be that you find you want to handle the administration duties yourself and not use a professional for this area of the business. If this is the case there are a number of things that a franchisee needs to consider.

Top tips for financial management 

1. Set up processes

Keep track of your business’ finance by setting up processes to monitor all aspects of your business finance at the start. It would be best if this aspect of your financial management scheme is set up with the assistance of a professional bookkeeper or your accountant.  Having the system set up correctly from the outset will ensure that you are on the right track and know the key deadline dates for compliance. 

2. Monitor cash flow

Regularly monitor your cash flow as it needs to be planned and predicted.

3. Forecast

Do not solely rely on your bank statements because this information does not help present a regular projection. It’s more ideal to have daily reports and a rolling three month cash flow forecast to send alerts when discrepancies between collections and commitments appear.

4. Plan for tax time

Make sure you have a strong plan for tax time, with the impact on cash of superannuation payments and all outgoing costs. Too many times I’ve seen a business falter because it simply didn’t have the appropriate systems and strategies in place.

5. Know your numbers

Stay on top of your financial numbers as this allows you to make good decisions. If you want to be successful, and if you want to reduce your stress, prepare regular bank reconciliations, monthly historical cash flow reports and rolling cash flow projections.

As a business owner the biggest stress can be the unknown. When you get surprised by something, you get stressed, you start worrying about what else could be missing and it can quickly spiral out of control. Stress can cause a business owner to make bad decisions and make you feel downright miserable.

6. Be prepared

As a franchisee, a good financial plan will give you the confidence coupled with being in control to be able to anticipate and implement contingency planning if necessary, rather than bracing for a looming crisis.

7. Learn from failure

Expect failures, learn from them and adapt, so you can subsequently recover from them quickly.

8. Adopt a healthy lifestyle

The process of becoming a successful leader is no different to the process of becoming a fully balanced person. A healthy life is considered the currency of growth and prosperity. A simple, healthy lifestyle is an invaluable investment, a critical component to achieving extraordinary things, in yourself and your business. Taking the time to make healthy changes, daily, is a guaranteed to be an excellent ROI.

9. Be optimistic

Having an optimistic attitude to your business is essential.  It is easy to drop into the depths of negativity! Keeping a healthy, positive perspective breeds healthy performance and cultivating this mindset is a pivotal lifestyle choice. Mindful optimism takes work, make it a habit to re-frame the mind and look for the positives. It’s important to embrace optimism; it releases your productivity and will take your business to new levels.

10. Communicate with your franchisor

A franchise business can fail for many reasons and sometimes this can be beyond the franchisee’s capabilities to prevent. However, when it comes to financial management there is a key role for the franchisor to play. 

Have good communication with your franchisor and allow them to assist you when you are setting up your financial structures to ensure that your processes are in line with and incorporate the monitor systems used by your franchisor when reviewing your compliance.