We’re not all financially savvy and often the realisation arrives very late. Sometimes it might come when you have your own business and there are even greater costs of financial illiteracy.
The good news is that anyone can improve their finance and cash flow management at any time and in ways that don’t require you to spend years obtaining a university degree. Options include hiring a financial advisor to provide personalised advice, finding a mentor you admire, or gaining general advice from the huge amount of free resources on the Net. All of these serve as a great opportunity to grow beyond your current situation, yet many small business owners don’t know which avenue to pursue.
Financial advisors and accountants
The formal route is to engage the services of a financial advisor or accountant. They will know the ins and outs of your personal situation and be able to give you financial advice tailored to your specific circumstances. Ask around for referrals and choose someone who has a solid background in the area you need to improve.
Which one should you engage? It depends. In short, a financial advisor can teach you how to use the money you currently have and create a personalised plan to build wealth and a more secure future. It is also worth noting that financial advisors are not solely for the wealthy. This is a long-standing myth that needs to be busted. Your second option is to employ the services of an accountant. They can assist with other crucial business matters including tax preparation and tax laws, financial statements, expenses, depreciation, auditing, and business structure recommendations.
Real-life role models
Is there someone in your life – it could be someone close or even just an acquaintance – whom you admire financially? They might be in the same industry and know the particular issues you face, or they could be a family member who has always been clever with their money. They don’t even have to be the richest person on the block but they live a great life with what they have. Avoid flat out asking them to be your financial role model because that could make them uncomfortable. Instead ask for their advice about a particular issue or how they achieved certain milestones. Chances are they will be flattered and willing to talk about their experiences.
While you don’t want to lay out your problems in their entirety and should not get all your advice from someone unqualified to give it, a financial role model could point you in the right direction, have a recommendation for a financial professional, or suggest some new ideas you may not have considered.
Websites, blogs and podcasts
As we all know, anyone can produce a blog or podcast with no credentials or experience behind them. However, there is a wealth of excellent advice on the World Wide Web that you can use, even if it’s not personalised to you and your business. Depending on what you think you need help with, there will be something applicable to you: small business problems, personal budgeting, entrepreneurship, and so on. You have the pick of the litter with the amount of free blogs and podcasts now available to anyone who wants to listen.
Look for those that have a solid following or the credentials to back up their financial and cash flow advice. Trusted sources include the government-run Australian Small Business and Family Enterprise Ombudsman and the ASIC’s Money Smart, or major newspapers’ financial sections like the Sydney Morning Herald’s MySmallBusiness. Other great online sources include the ever-popular Barefoot Investor and The Financial Planners Association.
Financial health begins with a smart budget. Reep provides online cash flow budgeting, forecasting and scenario planning software for small businesses.