A lot of small business owners struggle with their finances in large part because they aren’t practicing healthy financial leadership habits. And by not practicing them, they’re having a negative impact on their team, their revenue, and their future growth.
If that’s you, I’m going to share some healthy financial leadership habits you can start practicing today. Over time, I believe adopting these habits could really benefit your team, boost your bottom line, and help you build a sustainable company.
But before I jump into the bulk of the post, let me explain a bit about healthy financial leadership.
At its most basic level, practicing healthy financial leadership looks like keeping your accounting records updated and organized.
That’s the baseline.
But there’s a lot more practical habits you can (and should) integrate into your business.
Here are a few…
Habit 1: Keep your business and personal accounts separate
As a business owner, I think it is important to treat the business separately than how you treat your personal accounts.
This means using the company’s money in a way that benefits the company.
If you take money from your business account to pay for personal expenses, you’ll send the wrong message to your team. Doing this creates a “rules for thee but not for me” dynamic that negatively impacts your business culture.
Here’s a good rule of thumb: If you wouldn’t let your team members buy something personal using company money, don’t do it yourself.
Plus, if you use your business account for personal expenses, and you get audited, you could be in real trouble. Yes, audits are rare, but they can happen.
Here’s a better way to go about it: If you consistently need more money from your company to pay for personal expenses, then pay yourself a higher salary.
Habit 2: Don’t rob Peter to pay Paul
Get into the habit of avoiding the common temptation of “robbing Peter to pay Paul.”
For example, let’s say your business has more than one entity that each operates independently. It can be tempting to take money from the one doing well to support the one doing poorly.
But this is often not the right thing to do.
Doing this could mean that the group that’s performing well can’t pay their bills because so much of their money is going to the poorly performing group.
And since you have team members who are managing these entities, you end up creating more work and frustration for them.
If there’s money left over in the group that’s performing well, sure, send the money over to the entity that’s struggling.
But don’t “rob Peter to pay Paul” because Peter will suffer.
Habit 3: Have defined financial policies in place
You need to have defined financial policies in place that remove confusing, gray areas for your team surrounding money.
So, for instance, with your employee expense reimbursements, you want a really clear policy that outlines what they can be reimbursed for, so there isn’t any room for confusion.
I’ve seen business owners who had to tell their team members that certain purchases won’t be authorized. Well, naturally, the people that were told that weren’t happy.
You can avoid all that if you have clear policies.
Habit 4: Encourage continuing financial education and seminars
It’s not easy to stay abreast of current financial policies and procedures and tax changes and all the different things that are going on in the world of finance today.
So, attend seminars or classes that can help you stay up-to-date. And encourage your team members to do so (even if they’re not in a finance role).
You can find a lot of these resources online, especially through accounting programs that you use, such as Quickbooks.
Bottom Line
If you’re reading this, I’m guessing you want to be fiscally responsible with your company’s resources. I hope this post either gives you ideas for habits you can start implementing or affirms those habits you currently practice.
And if you need help integrating these habits into your business, let’s talk. As a fractional CFO, I can help you and your team make healthier financial moves while ensuring your books are updated and organized.
Click the Schedule a Consultation button to get started.