On this page
- Stay in control of your business finances
- Understand the basics of bookkeeping and budgeting
- Manage customer orders and supplier payments
- Promote your business
- Understand the basics of wages
Stay in control of your business finances, and avoid losing money on sales. Use our templates to know your:
- financial position
- profit and loss
- cash flow forecast
- break even point.
Bookkeeping and budgeting basics
Running a business includes keeping up with your bookkeeping and financial reporting.
To do this:
- Set up a bookkeeping system – this can be as simple as a record keeping book from the newsagents, or purpose-built accounting software, such as Quicken or MYOB. Keep your entries up-to-date to know the exact state of your finances.
- Use the checklist on business records (see the financial policies and procedures manuals template) and how long to keep them – including financial and employment records.
- Find out if you need to register, report and pay GST.
- Talk to your accountant regularly – an accountant who regularly checks your finances will help detect potential problems and provide suggestions for ways to improve your business.
- Use the financial policies and procedures manual template above and modify it to suit your business.
- Budget and refinance your business if your reporting shows you're continually reliant on overdraft or other financing facilities. Use the financial statement template above to produce your cash flow statement.
- Have a projected cash flow for the next 12 months to work out if your business is tracking for growth, or losing money – anticipating when and how much money is coming in and going out is critical to maintaining a positive cash flow.
- Create a budget to enable the planned financial operation of the business to be measured against the forecast.
- Increase your income by planning more strategically to grow your business.
Stock, supplier and customer basics
Maintaining your cash flow and growing your profits requires you to manage customer orders and supplier payments.
To do this:
- Keep up with your supplier payments
Owing other businesses and the tax office money is one of the first signs your business does not have a strong cash flow.
- Manage your cash flow by completing a cash flow forecast statement to make sure you have money to pay your suppliers on time.
- Manage your customer debt – if your customers owe you money, do you know how much is owed and how overdue the payments are? If your customers owe you money outside of your credit terms, you need to act swiftly to collect this money.
- Know your break even point, gross profit and profit margin figures to price your goods and services to cover your total cost of producing a product or service.
These figures are essential to charge enough to cover costs and make a reasonable profit. Calculate these figures by using our financial statements template.
- Review and then increase or decrease product and service costs – your cost structure should not be set in concrete. Profitable businesses have regular reviews and make allowance for rising costs or sales dips.
Sales and marketing basics
To promote your business to new and existing customers:
- don't just compete on price – use promotions and offers other than sales and discounts. If you have many competitors and your point of difference is being one of the cheapest, your margins will always be slim and eventually someone will undercut you. Work on creating value-added points of difference that you can advertise
- benchmark your business against competitors to help you plan and implement changes to boost your business performance
- find out how to improve your sales by having a good understanding of your customers
- assess your marketing campaign by conducting market research to find out where your sales techniques and market reach can be improved
Staffing and wage basics
Sole trader wages
To pay yourself wages as a sole trader, it should come from the sales revenue you've made after you've taken out all your expenses.
Calculate your net margin (which is the sales dollars left after subtracting both the cost of goods sold and the overhead expenses) and gross margin (sales dollars left after subtracting the cost of the goods sold from net sales).
Visit our page on calculating your break even point, margin and markup to understand these figures.
Are you keeping up with all your employer obligations?
Super and PAYG obligations are usually part of a quarterly tax office return and should be recorded on a separate line in your cash flow statement, so the money is put aside and you're not caught short every quarter.
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