Six tips to building your financial confidence

Whatever the size of your business, you need a smart financial mindset. Worrying about money is an unhelpful distraction from achieving success.

Here are six tips to help you:

○ Automate your finances. Make life easier for yourself by automating your business finances. Many online banks offer integration with popular accounting packages, such as Xero and Freeagent. This saves you lots of tedious bookkeeping and ensures your records are accurate. It’ll take a little while to get everything set up, but you’ll be pleased you did it.

○ Work out your true costs. Unless you know exactly how much it costs to run your business, you can’t be sure you’re charging enough. Have you included everything? Watch out for irregular expenses, such as new laptops. And be careful you’re not subsidising the business (and clients) by covering expenses from your own pocket.

○ Implement payment terms. Cashflow problems are the number one reason why small businesses perish. Unless the money comes in, you can’t pay yourself or your suppliers. Implementing robust payment terms can help keep the cash flowing. Of course, not all clients will honour those terms, but they’re more likely to pay if it means avoiding a financial penalty.

○ Pay yourself a decent income. Often, small business owners pay everyone else first, then take whatever’s left over. Sometimes that’s nothing. If you worked for a boss who paid you hardly anything, how motivated would you feel? Calculate your living costs and make sure you’re charging enough. You can do better work for clients if you invest in yourself.

○ Protect against disaster. Perhaps the scariest aspect of self-employment is that you no longer get sick pay. Unless you have savings, accidents or illness could be disastrous. Also consider professional indemnity and public liability insurance. These policies protect you if clients make a legal claim against you. The right cover can give you peace of mind.

○ Keep on top of your taxes. Nobody enjoys doing their tax return, but ignoring that brown envelope won’t make it go away. Although there’s no need to pay your personal tax bill until January 31, calculating the amount well in advance helps you plan and spread the cost. Once you feel confident about money, you can focus on what you do best.

Financial coach Catherine Pope is leading the Brighton Chamber bite-sized learning session ‘Six steps to build your financial confidence’ on February 20. For more details, visit brightonchamber.co.uk