If you’ve been on the look out for ways to control of your finances as a sole trader, then you’ve come to the right place. We take a look at some basic strategies and ways you can manage your finances better as a sole trader and hopefully save a few dollars along the way.
Review your business structure
What might have worked in the past for your sole trader business may no longer be the right fit. Businesses grow, needs and demands change and your financial position is going to be impacted as part of the process.
Spend some time adding up how much you spend on things like:
- Your operating costs
- Forecasting of customers, sales predictions
- Understand the capabilities of your business, like how much stock you can produce in a certain time frame to keep up with demand, how many clients you can take on at one time etc
Looking at these variables you can start to see which parts of your business you may need to invest in growing or cutting back. Doing the math, pinpointing trends and being aware of your business’ position.
Know your budget and stick to it
Budgets are there to try and keep your sole trader business financially on track. If you haven’t done so already, set some financial goals and targets in place. This will not only help your business to grow, but it will also help to keep your business financially discipled.
Don’t forget to forecast your outgoing and incoming costs to get an understanding of your business and to plan accordingly.
Revising your budget over time is also an important measure to take, because what may have been working for your business a year ago may not be the best way to approach your finances now.
Be aware of your finances
If there is one area of your business that you need to stay on top of your game with, it is your finances. It’s not something that you can turn a blind eye to and hope for the best. Managing your sole trader business requires effort, planning and having an awareness of how your business is tracking financially.
These are some of the things you can do to stay on top of your finances:
- Keep your records and receipts
- Know how your money is being spent and ensure that there isn’t anything that you are wasting your finances on
- Always keep your personal and business accounts separate
- Be aware of the peaks and lows of your business and its trade, plan for those down times when cash flow may be more limited
Eye on invoices
Your cash flow is pivotal to keeping your sole trader business running, that’s why you need to be aware of what money is owed to your business and that your debtors are paying on time.
If you’re paying for materials or labour up front, you need to ensure that you are getting enough income back to cover these costs in the interim.
It may seem simple, but sometimes you may even forget to send an invoice or chase up an overdue payment. If your debtors are not paying on time, make time to chase the payment up.
Don’t be afraid to seek advice
Whether it’s your financial planner, business banker, accountant or other financial expert, don’t be afraid to get their advice and strategies on how you can grow your sole trader business. Their experience, knowledge and understanding of current market trends is something that could potentially boost your business to new heights.
Be clear on the kind of financial goals you have for your business and ask for tips on what you can do to help improve and get your sole trader business on track to achieve them.
Look for a better deal
Saving money is something that all sole traders should have as part of their financial tool kit. One of the easiest ways to do this is to review your costs and look around for better deals.
Some of the things to consider:
- Looking at switching utility providers
- Assessing your rates with current suppliers and talking about discounted rates
- Reviewing your rental agreement
- Asking your banker for a better interest rate on your business loans
- Shopping around for a better deal on your business insurance
Could you be getting better sole trader business insurance?
Like the old saying goes, ‘it pays to shop around’ but in all honesty who has the time to spend hours going though insurance comparison sites to try and get a better premium with their business insurance? At BizCover, we understand sole traders, and we know how busy you are, that’s why we do the shopping around for you.
Whether it’s Public Liability insurance*, Portable Tool Cover* or Business Interruption cover* we offer a range of business insurance solutions for you to compare, chose and save from in the click of a button.
Get a quote and start experiencing insurance with no-dramas today!
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. BizCover Limited is owned by BizCover Pty Ltd (ABN 68 127 707 975)
