Many of us have changed our financial habits in response to the challenges thrown up by the pandemic - and the same is true of how we now run our businesses.
The difficulties of the last year have seen business owners get financial savvy and make smart decisions about day-to-day business management.
And while the UK’s economic recovery should provide a boost to every business owner, holding on to your new-found habits is a way to ensure that you keep the ship steady and improve your business fortunes as life goes back to normal.
Habit #1: Paying more attention
We can’t fix what we don’t know, and the pandemic has made us focus on our finances like never before.
From reviewing ongoing supplier costs to speeding up invoicing and setting new payment terms, paying more attention to day-to-day operations is the first step to improved business cash flow and overall management.
Not only that, but it usually translates into better bookkeeping - saving you time, energy and accountancy costs later down the line, and even helping to identify and protect you against fraud.
Habit #2: Setting better budgets
Many business owners have had to grapple with tighter finances since the pandemic, and create strict budgets to help weather the storm.
By laying out a detailed budget that covers spending across your business – ongoing subscriptions, contractor fees, maybe even client entertainment (fingers crossed!) – you can improve your decision-making and get in control of your finances from the outset.
And if you can track your actual spending against your budget as the year unfolds, you’ll be able to avoid accidental overspend and spot any areas where your plans may need adjusting.
With Monzo Business, you can create budgets for your business and see how you’re doing at a glance. Learn more and apply for a Monzo Business account here.
Habit #3: Building up savings
The pandemic has created ‘accidental savers’, both personally and professionally. Maybe you’ve switched to remote work and cut your petrol or public transport costs to zero. You may even have decided to cancel your office lease or co-working pass.
But as everything reopens this summer, spending will almost certainly go up, and it may be harder to keep up with saving like you used to.
Some people recommend the 50-30-20 rule, where you save 20% of your earnings each month. You might not need to be that strict about the percentages, particularly if your business income changes from month to month. But if you can, it’s a good idea to try and save at least something each month.
Another helpful tip is to separate your savings into different Pots. One could be for short-term contingency savings in case your business has a tough month or unexpected cash flow problems. You could also set one up for long-term savings goals – whether that’s for investment into your business or it’s a personal reward for all of your hard work.
Habit #4: Taking advantage of technology
From online business bank accounts to financial fitness tools, people have been busy adopting new technologies through the pandemic to manage their finances and become more aware of their habits.
Some provide handy budget calculators; some tell you your ‘money moods’ while others look at your current spending and predict what your finances will look like by the end of the month or further. Whatever your financial need, there’s usually an app or tool to support you with it.
Checking in with these apps is another behaviour we should all look to hang onto. Try not to over-check, as it’s easy to become hung up on every last penny flowing in and out of your accounts.
Habit #5: Shopping for value
Cost-cutting measures aren’t always a good idea if they cause the quality of your products and services to fall, but throughout the pandemic, what we’ve seen from business owners are ‘belt tightening’ measures that have made their operations leaner and more efficient.
When it comes to energy, telephone, broadband, and other essential business services, it can often pay to shop around, especially if you’ve been on the same contract for several years. The upshot may be that you end up renegotiating with your existing supplier rather than switching – but often, you won’t know there’s a better deal unless you ask.