7 Financial Habits of Successful Business Owners

Having worked with a diverse mixture of businesses over the last ten years, we have identified a clear pattern in how the more successful business owners deal with their finances.

We are not talking about the personal attributes of these individuals here, such as ambition, vision, leadership etc, however these go hand in hand with the financial habits.

1. Forecasting (Planning)

It is essential to have the full 7 habits in place, but by far and away the most important to the growth and success of a business is the forecasting process.

When a business is on a growth trajectory, there are certain milestones that are encountered, taking on the first employee, taking on the first premises, moving premises, investing in capital equipment and so on.

By having a plan of how the business intends to approach these milestones, together with a financial picture of how these are expected to look, there is more chance of them being achieved. Furthermore, the journey should be much more organised and less stressful, due to the ability to identify and deal with hiccups on the way.

Without the forecasting process, much of the information is contained within the head of the business owner, along with 99,000 other thoughts. Whilst people think that they are able to multi task and retain a lot of information in their heads, this is by far the least efficient way of developing a growing business. Opportunities may be missed and the stress of unexpected or unplanned occurrences can send the best of us into a tail spin.

Our top tips for business forecasting are:

  • Take time to spend on forecasting and view it as an investment, rather than something that you squeeze into a few minutes if you get chance;
  • Start simply with spreadsheet templates for the financial forecasts. Many of the software options do not factor in one off or seasonal expenses that are key to your business outgoings or incomings, they work more on percentage increases and industry averages;
  • It is important that your forecasts are realistic. Think of S.M.A.R.T. objectives;
  • Don't do this as a one off, stand alone exercise. Compare actual to forecast and update or alter where necessary;
  • Take into account personal drawings needed as failure to do so can have disastrous implications for the business;
  • Remember a forecast is an estimate of what you think will happen. It is not set in stone and can be changed as circumstances change.

2. Budget

If you don’t keep a close eye on your expenses, they will run away with your profit. It is very easy in business to spend money without control. Part of the management information review will assist in this process. It is essential to ensure that you understand where you are spending money or more importantly how much you have to spend.

By setting budgets and communicating these to your team if you have one or your business partners, they too will appreciate the importance of having control over the spending in the business.

Thought needs to be given to every purchase to consider, if it was not budgeted, is it necessary and has the best price for the quality been achieved. (After all the cheapest is not always the best).

3. Management Information

This is the financial information that is produced according to the requirements of the business. Contrary to belief, there is no hard and fast rule as to what format it should be in and the most successful business people find a format that suits their requirements, rather than using a format created by someone else for their own purposes.

Management information typically (but not limited to) includes;

  • Profit and loss account (month by month breakdown ideally);
  • Balance sheet; or
  • Detail of trade debtors, trade creditors, bank balances, VAT, PAYE & tax accrued to date;
  • Key performance indicators, specific to the business, such as sales per person, sales breakdown, Gross Margin, Stock holding days, and so on;
  • Review of the overheads;
  • Comparison of budget to actual results;
  • Review and update of cash-flow forecast;
  • Review of sales pipeline and prospect list where appropriate;
  • Any other measures the business feels appropriate

By having a discipline of regularly reviewing the financial results to date, the business owners are much more in touch with what is going on in the business. By going through the process of preparing management information regularly, ideally monthly, (although for some businesses quarterly will suffice), business owners are able to react quickly to any unexpected or undesirable results.

Examples of benefits of having timely management information are:

  • Identifying deviation of actual to forecast sales and the ability to react quickly;
  • Identifying holes in cash-flow before it occurs and taking appropriate action;
  • Identifying overspend in expenses and ability to review and stop if necessary;
  • Identifying deviation in gross margin and ability to take action;
  • Keeping track of of profit and the provision for corporation tax;
  • Keeping track of owners drawings to date and ensuring it is not excessive;
  • Review debtor position and making the decision whether to continue to supply slow payers or alter credit terms;
  • Review whether recent marketing/sales activity vs spend has been successful and whether to invest more time/resource;
  • Identify when the business will be ready to take on (more) staff or invest more capital;
  • Bookkeepers don't necessarily do month end journal adjustments such as to correct for payroll transactions, accruals, prepayments WIP etc, meaning the unadjusted bookkeeping figures do not necessarily show a complete picture of the results to date. The management accounts process will cover this;
  • Having the results interpreted and explained.

The trick to good management information is to ensure you have a good bookkeeper, which will save on time when it comes to interpreting the results, as you do not have to spend hours correcting their mistakes.

The production of management information does not have to be an arduous and time consuming process. There are many freelance management accountants in the market or some accountancy practices, like CCF, offer management accounting packages.

Remember, ensure the format suits whoever is using the information. This information is not going to anyone other than the business owners; however the banks wouldn’t mind seeing it from time to time. They can include graphs, columns, pages on pages of numbers, written summaries or whatever suits the user.

4. Bookkeeping

The cornerstone of good business financials is a strong bookkeeping system, which is maintained regularly.

Many business owners start their record keeping using spreadsheets, which is good for simple accounting, however once the business starts to grow and the volume of transactions increases, then there will be a time when a more comprehensive solution is required.

Our top tips for a good bookkeeping system are:

  • Take time to spend on forecasting and view it as an investment, rather than something that you will squeeze in a few minutes if you get chance;
  • Start simply with spreadsheet templates for the financial forecasts. Many of the software options do not factor in one off or seasonal expenses that are key to your business outgoings or incomings, they work more on percentage increases and industry averages;
  • It is important that your forecasts are realistic. Think of S.M.A.R.T. objectives;
  • Don’t do this as a one off, stand alone exercise. Compare actual to forecast and update or alter where necessary;
  • Take into account personal drawings needs as failure to do so can have disastrous implications for the business.

Often business owners decide to look after the bookkeeping themselves, even though it is an area of the business that they do not like or understand. The financial function is the heart of the business and it is essential that it is looked after properly.

If you are putting this off, not regularly updating the records, except for rush for the VAT or year-end accounts, this is a sign that you should look to delegate responsibility to someone who wants to do it. This will save time and money in the long run.

5. Invoicing

This may seem like an obvious statement, but not all businesses deal with this effectively; When you have finished delivering your service/product, don’t forget to invoice for it.

Many businesses do not have a system for invoicing for their work. If you don’t invoice in a timely manner, you delay the length of time it takes to get paid and this can have a dire effect on your cash-flow.

Employ a clear system for raising sales invoices and more importantly delivering them, to the right person. Sending an invoice to the person who requested the work is not necessarily the person who is going to pay it.

A common mistake is to leave all of the invoicing until the end of the month. Whist batching tasks to save time is a good practice to use; weekly invoicing is preferable to monthly.

In instances where the practice of monthly invoicing to regular customers is prevalent, then the setting up of standing orders for the core monthly costs should be considered to save time and speed up payments. The balance of extra services can always be paid on invoice as usual.

Ensuring the clients are aware of your terms and conditions can make the invoicing system easier, particularly if you wish to change the frequency of your invoicing.

6. Credit Control

One of the biggest sources of anxiety we see in businesses is people not feeling comfortable in asking for money, more importantly, what is due.

By having a regular system for credit control in place, customers will become familiar with it and will know how far they can stretch your payment terms (or not) before they have to pay you.

A typical system would be:

  • End of each month, email/post standard statement for <30 day old invoices;
  • >30 day old invoices email to request payment ASAP;
  • >60 day old invoices, telephone call to request payment ASAP;
  • >90 day old invoices formal letter requesting payment within 7 days otherwise referral to solicitor;
  • If threatening legal action, progress to solicitors letter, can cost as little as 7.50.


Some people do not receive the invoice, some people choose to ignore it until payment is requested, some do not have the money to pay. It is imperative you increase the likeliness of getting paid promptly by having the system of chasing up payments.

Remember a telephone call is always going to achieve better results than a statement or email reminder, which is easy for someone to ignore.

If you don’t like doing it, you can always get your bookkeeper to do it or outsource to a credit control company.

7. The Accountant

By having the six habits in place, you will always get better value from your accountant. Rather than having to use their time in coaching you into getting these essential habits in place, they are able to work closely with you to interpret & analyse the results.

To summarise the business owners should be getting from their accountant:

  • Regular meetings to interpret results;
  • Feedback and support on the internal bookkeeping/management accounts system;
  • Proactive tax advice;
  • Business advice where needed;
  • Final year-end figures as soon as possible after year end.

The most forward thinking and successful businesses have a close relationship with their accountant and rather than seeing them once a year to review the annual accounts, they would meet with them a minimum of quarterly to review interim results.

The results should be provided as soon as possible after the year end to identify any problem areas not picked up in the management accounting process.

The accountant is in the perfect position to be able to provide advice on the tax implications of actions and to ensure that the business is optimising the most tax efficient position. By them having regular contact with their client, then they get a better feel for the business and are able to identify opportunities or risks early.

Many business owners in the early years cannot afford a team of senior managers/directors and often find that their position is lonely without someone to bounce thoughts or ideas off. This is a key support that accountants should be able to provide.


We have shared the 7 Financial Habits of Successful Business Owners and we suggest you look at your own business and see how you rate against these. Think about covering the bases as follows;

  • Forecasting – if your forecast is in your head and not documented then you get it laid out on a spreadsheet. It could present some surprises and benefit your business greatly;
  • Budget – think before you spend, but be realistic and be prepared to be flexible when necessary;
  • Review and analyse the management information and ensure it is in a format and language you understand. You don’t have to make things corporate just because you think that is what is expected in the business world;
  • Delegate the bookkeeping, especially if you do not like doing it or do not have the time or inclination to deal with it regularly and accurately;
  • Make sure your invoicing system ensures they go to your customers in a timely manner;
  • Have a clear credit control system in place to speed up the time it takes to get paid;
  • Ensure your accountant is working for you proactively and interacting with you regularly to ensure you are getting the best advice in a timely manner.


The financial system is a core part of the business and when you have all of the elements in place, it is not a burdensome task but a key ingredient to the future and success of your business.

I hope you have found this report useful. If so, please feel free to share it with fellow business owners.

If you found the “7 Financial Habits of Highly Successful Business Owners” of benefit to you it may also interest you to know we run a number of free topical educational workshops within CCF. To see what we have coming up over the next few months please check out our events page and contact to secure your place.

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