Making my money work efficiently

How should I be planning and tracking my finances?

To track your cash flow, create a balance sheet itemizing all sources of business income in one column and all expenditures (including both fixed-overhead costs, like equipment, and variable costs, like product inputs) in the other column. Include both current and expected sources of income and expenditure on these lists.

Use your balance sheet to create reliable financial projections. Ideally, your balance sheet should give you a reliable cash flow forecast for the next six to twelve months. This will allow you to determine how much cash on hand is required at any time. Make sure that you can always access enough operating capital to cover your expenditures and maturing debts.

How should I be investing my profits?

Your business’s investment strategy will be unique to your own vision, goals and needs. However, there are many ways your profits could build your business’s productivity, efficiency and—hopefully—future profitability.

Investing in infrastructure and operations can bring valuable results—especially if your business is relatively new. You might consider investing in product research and development, for example, or technologies that can help streamline operations. You might also consider investing in more stores, production centers or products that you offer, so as to expand your current business efforts. Marketing may be a good place to invest to grow your customer base, along with building up your digital presence.

Another way to think about it is investing in your employees. This might involve the development of training programs, so that they are more effective on the job, or expanding your benefits package to keep them happy.

Whatever investment route you pursue, remember not to invest in just one aspect of your business. Instead, pursue a holistic investment strategy, as this will likely lead to stronger and more sustainable returns.