While your relationship with your business partner, your employees, your customers and your spouse has impact on your business; it's your relationship with money that is most crucial to your long term viability and overall success.
Maintaining a healthy perspective on money is key to getting your business off the ground and seeing it succeed for the long term. Some keys to a successful relationship include:
Have Complete Control
You need to understand how the money flows in and out of your organization better than anyone else. You should be able to price your product, service or offering off the top of your head and understand when providing a discount or special pricing will have a negative impact on your bottom-line.
It doesn't take a sophisticated accounting package to gain this understanding.
Creating a simple spreadsheet that takes into account all direct and indirect costs will give you a good idea of your starting point. Once you understand what goes into the creation of your product and service, you should constantly look out for ways to improve these costs through special pricing, volume discounts or more efficient resources.
If you don't know these numbers, they won't be top of mind when you are networking and connecting with others. It's part of your job to constantly be on the lookout for ways to improve your top and bottom-line.
Give Up Control
Don't do the mundane tasks of keeping up with your company's day to day finances. Let someone else enter and pay the bills.
You have bigger problems to tackle - like setting your company's vision or finding your next customer. Put a checks and balance system in place to make sure everything stays above board. I hold a monthly meeting with the accountants responsible for my businesses to evaluate actual versus plan and discuss large items or material changes.
Establishing budgets and putting others in control of those budget items is one of the best things I ever did for my company. At first I was afraid that my employees would spend the budget frivolously. Quite the contrary - they are always judicious with the money they are entrusted with and end up saving the company money in ways I would never consider. And because many people control the money, there is little room for deception.
Stay Up to Date
Not only do smart business owners keep their corporate finances up to date, they build systems that let them understand the state of their business on a consistent and ongoing basis.
You should have 3 to 5 numbers that you pay attention to on an almost daily basis. It could be number of new customers, amount of signed contracts, length of support calls - whatever is important to the success of your business.
Each of these numbers represents the health of your business - much like the gas gauge in your car or the heart monitor on your smart watch. You and your team should instinctively know what to do if one of these numbers is out of range.
Pay Attention to Patterns
Every business I work with or have owned has specific patterns to the way finances flow. You need to look at your own business and look for the patterns that indicate good - or bad - times ahead.
Does your business have a slow time of the year for sales? Are there better times for cash on hand and to collect receivables? Does a certain event or uncertainty (e.g. an election) cause a slow down in orders or work? In my service businesses, if the project doesn't sign by Thanksgiving, it's very unlikely to sign until the beginning of the next year.
You can't ignore the finances of your business, but you shouldn't obsess. Build the right processes and systems to ensure your success.