Poor financial management skills is one of the biggest reasons behind failed businesses. Proper financial management not only provides an accurate picture of how well your business is performing, but can provide a guideline for business owners and franchisees to make informed decisions for your business.
“Financial management is crucial and the owner’s need to be able to manage their finances efficiently in terms of loan repayments and cash flow management which can contribute to the success of their businesses,” says Morne Cronje, Head of FNB Franchise.
Cronje has advice for franchisees to keep in mind when looking at their finances.
1. Keep all your finances up to date – Because finances will form a major part of your discussions with your franchisor, make sure they are all up-to-date and readily available, says Cronje.
2. Read every report and financial statement, even if they are handled by an accountant or a third party – and make sure you understand what you’re reading, adds Cronje.
3. An accountant might be the answer, says Cronje, especially if you’re not adequately qualified to handle the finances of your franchise, including taxes, payroll and paying bills.
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4. Have a good relationship with your bank – It’s important to notify your bank if your business/ franchisees runs into financial difficulty, says Cronje. This, he says, could mean your bank taking a more understanding approach to any possible defaults.
5. Stay on top of economic trends – Know what’s happening in your industry and your economy, be aware of any signs of financial stress, so you can take the necessary steps to weather the storm.