Imagine you’re about to build your dream home – it’s everything you ever imagined. You’ve got a fantastic architect and an excellent team of builders on the project, and on day one, they lay the base for your home.

The team maps out where all the foundations lie, knowing that solid foundations will ensure the house’s stability and provide the strength to support future extensions, adapt to environmental challenges and stand the test of time.

Like that dream home, your business also needs solid foundations – from operations and people management to marketing and finances. These fundamental elements and core components will build a sustainable business, and are key to long-term business growth.

But many business owners, in the rush to get a business up and running, overlook those all-important foundations – and that goes double for the finances.

Top tips for taking control of your financials

While most business owners start with the best intentions, hours spent working in the business and dealing with day-to-day operations can quickly take their toll. This is when those financial foundations are put to the test and if they’re lacking, before long, there’s no cash flow or profitability – and pretty soon, the business ends up on shaky ground.

It’s a common scenario: business owners who put all their time and energy into building a successful company find that one day, they have no idea what success really means to them and have nothing in their bank account to show for all their hard work.

So whether you’re a seasoned business owner or about to start a business, if it’s time to beef up your financial foundations, here’s where to start.

1. Take some time out

Whether it’s an hour or over a few days, stop working in the business and take time to work on the business. Take a helicopter view of your business. Where are you vulnerable, particularly regarding the money, and what do you need to review or change?

Actionable tip: Decide what success means to you now in this season of life and business, and set some financial goals to support your vision.

2. Understand cash flow

Cash flow – the money that flows in and out of your business – is vital to success, and without a clear understanding of your business’ cash flow, even a profitable business can run into trouble.

While many entrepreneurs focus solely on sales and revenue, managing expenses and timing cash inflows and outflows is essential.

Actionable tip: Create a cash flow forecast using a simple spreadsheet and plot revenue and expenses to predict your cash needs – when you can spend and when you need to save. The key to success is tracking and updating your cash flow forecast regularly. You can find free templates online.

3. Create a financial blueprint and set a realistic budget

A reasonable budget can help you set targets, allocate resources efficiently, plan for your business future and measure your performance against your financial goals. If you’re prone to overspending or want an easy way to measure your financial performance, try a budget.

Actionable tip: Develop a detailed budget that covers all aspects of the business, including marketing, operations and personnel. Review your budget regularly, measure actuals against the budget, and be open to adjusting your business strategy as the economic environment changes.

4. Pricing for profit

If you want sustainable growth, you need to price for profit. One of the most common mistakes business owners make is underpricing their products or services and while this can lead to a high revenue turnover, the business’ profit will inevitably suffer.

The key to a profitable business is to understand what it costs to run it, including your salary and superannuation, and then set prices that cover these costs but also generate a profit.

Actionable tip: Conduct a thorough analysis of your direct costs and overheads. With this information and your wages, superannuation and profit goals in mind, review your offers and set prices that ensure business profitability while remaining competitive in your market.

5. Get better organized

The key to monitoring your business health is maintaining accurate financial records. Not only will it be easy to track your business performance, but making informed decisions and fulfilling tax obligations can be as easy as the click of a button.

Actionable tip: Invest in a good cloud accounting system to monitor expenses and revenue, and keep your financial records up-to-date. Consider hiring a bookkeeper or accountant to manage this aspect of your business, especially if it’s not your strength.

6. Leverage financial reports

Make the financial reports your best friends in business. Your numbers tell a story and you deserve to be the author of your story, so at the very least, understand how to read your profit and loss statement. It will provide valuable insights into your business’ financial health.

Actionable tip: Make a date with yourself each week to review your financial reports. Use these to stay on top of your finances, identify trends, spot potential issues and make data-driven decisions.

7. Manage debt wisely

While debt can be a useful tool for financing growth, it must be managed carefully. Unless you’re bootstrapping your business, balancing debt for growth while maintaining manageable repayment levels is essential.

Actionable tip: Monitor your debt levels and establish a clear repayment plan. Avoid taking on more debt than your business can comfortably service.

8. Plan for tax time

Paying taxes is an inevitable part of running a business. Even if you choose to outsource the financial management of your business, as the owner, the buck stops with you. So understand your tax obligations, set aside funds to meet them and take note of due dates.

Actionable tip: Work with a tax advisor to understand your tax obligations and develop the best tax strategy for your business. Open a bank account for tax savings and set aside funds regularly to meet those obligations without stress.

9. Save for a rainy day

Business is not all sunshine and roses, so plan for the unexpected and set up an emergency fund. Having a cash reserve is essential for dealing with unforeseen expenses or economic downturns, and can provide peace of mind and help your business weather difficult times.

Actionable tip: Aim to set aside three-to-six months’ worth of operating expenses in a separate savings account. Build this fund gradually by setting aside a portion of your monthly profits.

Creating solid financial foundations for your business is not just about keeping your business afloat, but also setting yourself up for long-term success and profitability.

With just a tiny amount of financial know-how and a few simple tools, you can take control of your finances and pave the way for a successful future. And just like building that dream home, creating solid foundations will allow you to tailor and grow your business as you choose.