From one busy business owner to the next, I know firsthand how divided your time and attention can be while running your business. Where do your finances fall on your to do list?

For most people, it’s typically last! And that’s a little scary! There’s so much valuable information at your fingertips which can be leveraged to help you move your business forward in the right direction.

It’s time for some financial empowerment, let's explore the five essential steps to aligning yourself with positive financial behaviors, fostering long-term financial well-being within your real estate investing business.! 👊

1. Create a solid financial foundation by implementing bookkeeping best practices. Whether you are doing your bookkeeping yourself or have outsourced this task, here are a couple tips that will provide an instant benefit to your business. Keep your personal and business expenses separate through dedicated bank accounts for each property. This will save you a ton of time at the end of the month. Ensure you have a system in place for keeping your business receipts organized, ideally digitally to avoid loss and clutter. Stay up to date by inputting all entries and tying them back to your bank account monthly. Missing or incorrect entries can snowball as the year goes on making it harder to identify and resolve at the end of the year. 

2. Stay close to your numbers. As much as it’s tempting to complete the bookkeeping, breathe a sigh a relief and move on to the next property deal, you’ve missed a very crucial step. Have you concluded on what happened in your business this month? What went well or didn’t go well and why? How can you adjust operations moving forward to do MORE of what went well and LESS of what didn’t? Take the time to do a debrief and summarize what went on. If you have a dedicated finance professional such as a CFO they should be providing a summary to you or booking a call to discuss this. Ask questions and dig deeper if there’s something you don’t quite understand. There’s no point in continuing to scale and build your business if you don’t know what works and what doesn’t. 

3. Track and forecast your cash flow. Managing your cash levels are an integral part of your operations. Your business simply can’t function without you understanding what money is coming in and what money is going out. A monthly cash flow tracker can help you monitor your various income streams, expenses, and owner’s activity. This way you can understand what’s driving cash flow fluctuations, project where you’ll be a couple months out and plan for future obligations.

4. Plan for a rainy day by setting up adequate reserves. Would you have adequate cash to fund a sudden vacancy? A repair or maintenance call? An emergency with a unit? Yes we all love the idea of cash flowing properties but if we’re not being responsible and putting aside funds for the future, that cash flow could suddenly be wiped out for months requiring us to fund the property personally. Avoid the scramble and dedicate monthly cash flow to a reserve account, your future self will thank you. 

5. Prepare for tax time. The end of the year is not the time to find out that you’re behind and need to catch up on your finances to file your taxes. That’s a sure way to cause a lot of stress to you and those around you, especially if you’re trying to enjoy something special like the holiday season! If you’ve followed the above steps, you will be in a great position with your tax accountant when the time comes to file your taxes. Even better, if you understand what business activities have a tax implication, you can take actions early and avoid a surprise at the end of the year. Stay abreast of changing tax laws by staying connected with your tax accountant throughout the year. That way they can advise you on tax planning techniques ahead of time. 

I understand that managing your finances can be daunting. If you are still managing your finances yourself and want to invest in some education and a proven Do-It-Yourself financial system, check out my newly launched CFO-Yourself Downloadable Program! It includes a Financial Foundation eCourse, a customizable Cash Flow Tool and support directly from a Real Estate CFO.