10 FIRST STEPS TO LEARNING FINANCE

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 ‘Always think how you can accomplish things economically.’ Warren buffet

 

You understand that finance is important for your business. And you have also made a decision to learn about it. But, where to begin? What to do so that you create good financial habits that will lead your architectural firm to profitability?

 

Here is a beginner's guide to 10 easy habits that you can cultivate in order to take your first steps into developing your financial skills. 

 

 

  1. Allot budget for each project. Divide your budget(expected project fee) according to project phases. This will give you more control of how much effort in terms of time and cost you should spend in each project stage. Check your expenses regularly whether they remain within your defined budget.

  2. Accounting is an essential skill. Maintaining records, invoices and collection of cash is important as they affect the performance of your firm. Learn basics of accounting and if possible, hire a professional accountant to maintain your records. Buy good accounting software (recommended by consultants) and maintain accounts regularly.

  3. Maintain good balance between profitability and liquidity to assure enough money to keep the solvency (the ability to meet obligations as they come due) of the firm intact.

  4. Prepare cash flow plan for short–term requirement and long–term growth. Keep a close eye on your cash-flows. 

  5. Review your accounts periodically; spare at least a day per month to understand the status of the firm.

  6. Follow the principle of “Earn-Save-Spend” and not “Earn-Spend-Save”. Agree to invest certain percentage of your profits back into your business.

  7. Borrow money if you need to. But try to clear the liability at your earliest with a systematic approach.

  8. Don't only rely on your architectural practice to earn you money. You can make investments into other fields from the remaining profits. Learn more about investment basics for smal business owners here.

  9. Learn about tax regulations in your country and take a regular advise with your chartered accountat to manage taxes efficiently. 

  10. Your company is only as healthy as you are. So, eat well, sleep well, exercise well and don’t forget to drink lots of water. Maintain your health. 

 

 

Next>> Learn about some MONEY BASICS for ARCHITECTS and get started with basic terms used in finance

 

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