Video: The Biggest Mistakes Accountants Make

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Video Transcript

Title Slide: The Biggest Mistakes Accountants Make | With Leah Shales, Luella Schmidt, and Jen Hildahl

Leah Shales: I think that a big mistake that accountants make is not continuing to educate themselves. It’s really important to take training courses every year so you can stay current, learn about new technology, and also learn about ways to make your accounting processes more efficient.

Not just technology, but businesses in general are constantly evolving so accountants might be faced with new accounts or new transactions that they are not completely familiar with. So by taking training courses every year this provides you with ways to learn how to record the transactions properly for these accounts. (more…)

Common Small Business Financial Mistakes and How to Prevent Them

For many small business owners who are either new to entrepreneurship or struggling to adapt to some of today’s more innovative business technology, it’s easy to find yourself neglecting some very important financial practices essential to keeping your business on top of your competition in a fast-moving world.

Specifically for those who are newer than others when it comes to starting and maintaining a business, some tasks, which may appear to be of lesser relative importance to other responsibilities, can quickly start to hurt your business in some serious ways.

With that in mind, we’ve put together a list of some of the most commonly seen mistakes small businesses are making as a result of being overworked and undereducated about what matters most as you begin a business venture

Undercapitalizing early on

A major issue, which can plague an entrepreneur’s efforts before they even get off the ground, is having enough money to cover themselves in the short term. Raising initial capital can be extremely difficult unless a number of financial pieces fit together at the same time. While being optimistic about your business is certainly a  necessary early motivator, over optimism often clouds new business owners to the reality of how well they can expect to do during the first year of business.

Relying on your business to be self-sufficient within a year not only demonstrates a lack of practical business chops, but also can potentially lead to financial disaster if lenders are unable to collect on their investments when they expect to. Starting with sufficient initial capital is essential for businesses that experience early turbulence.

To be confident you can avoid this problem, try to mitigate unrestrained optimism about your product or service and be as conservative as possible when projecting your business into the short-term future. If you’re new to business, value the advice of those who have been in your shoes and pulled themselves out of the dark and into long-lasting success. At the very least, make sure you’re well-aware of your initial expenses and gather at least double the capital you project yourself to need.

Insufficient accounting considerations

Tracking your finances is a task that never ends. For those trying to juggle everything at once, it’s often one of the first business metrics to fall by wayside only to be noticed when it’s too late to reverse a negative trend. For business owners, glancing at your bank statements is not enough.

Although you may be entering the market with a ridiculous amount of capital in the bank, turning a blind eye to your cash flow can turn a small stream into a waterfall of lost money.

If you’re too busy to keep track of your books as well as your need to, hiring a bookkeeper either in-house or outsourced just to run basic financial reports can go further than you think. Accounting is much more than number crunching and calculations––it’s what allows you to track your performance with incredible accuracy. Seeing where cash is spent and projecting your growth into the future are two of the most essential parts to keeping a small business afloat in a turbulent business environment.

Poor resource allocation

Capital is meant to be spent; the trick is to know what to spend it on so you can start generating real revenue. When it comes to doling out your initial investments, carefully weigh the cost-benefit of everything decision you’re making.

By being smart with your resources, you can easily stop yourself from overspending before it starts to unbalance your cash flow. Before making a considerable investment in an item or service you’re unsure about, ask yourself if you can live without it––you might be surprised how little you actually need. 

If you’re looking for a reliable accounting or CFO service, contact our start-up accounting and CFO services experts.

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How To Maximize Your Chances Of Obtaining A Small Business Loan

For many small business owners, starting a small business means generating outside capital in addition to personal investment. Although certainly achievable, prospective small business owners shouldn’t go into the loan application process without going through the proper preparation. Receiving a loan often means doing some degree of research as well as meticulous organization and conceptualizing a coherent vision for the future.

Research local banks to rule out those who don’t specialize in your field

It’s important to understand that not all banks are the same. While some might cater specifically to budding entrepreneurs looking for a financial starting block, others may not offer business loans at all.

At a finer level, some financial institutions might offer loans only in specific areas of business while excluding others. Similarly, some may offer loans only to those businesses operating in a particular stage of the business cycle. These kinds of banks typically give loans to established businesses and exclude startups to mitigate risk but it’s best to look into such policies to make sure this is the case.

One of the key considerations to look for when “shopping” for banks is industry relevancy. If you’re confident in your proposal, focus on institutions that have partnered with similar businesses. Not only are these institutions typically more interested in businesses like yours, but will also have be better able to offer advice about your industry when specific financial questions arise.

Be fully prepared to explain your business proposition

Bankers rely completely on you to articulate your plan and vision for the company’s future. While confidence in your organization’s success should certainly characterize your overall presentation, bankers will not buy into lofty idealism without seeing a substantial financial plan fueling your optimism. Keep your plan practical and realistic––don’t overstate your goals.

A good way to keep your proposition within practical limits is to frame your plan around why consumers and other companies will be compelled to do business with you. A sensible way to get all of these ideas across at once is to lay out your best case business scenario along with the most likely one.

Formulate at least two ways to make good on your obligations to the bank

Along with establishing a viable business model for your short and long term future, the second big concern among banks considering a loan is the method of repayment. Typically, banks will be looking for two possible repayment sources. It’s up to you to formulate what these sources will be. Don’t rely on bankers to hold your hand and guide you toward a solution. This is your chance to convey a solid understanding of financial responsibility and planning.

If you’re struggling to put together a secondary plan, consider a pledge of collateral either business-related or personal. In addition, you could also establish a loan guarantee agreement among the owners or suppliers to reassure the bank their investment will be promptly repaid when due.

Get assistance from the Small Business Association if you’re struggling to formulate a proposal

The Small Business Association (SBA) can be a great financial resource for small businesses looking for extra assistance. In addition to providing government-backed loans through banks or credit unions, they also counsel small business owners primarily during the loan agreement process.

Although the SBA only provides direct loans and grants when assisting with disaster recovery, the programs offered through other banks can sometimes give eligible businesses longer repayment agreements as well as opportunities for businesses with bad credit to receive loans in the first place. If a potential lender is proposing a repayment plan too steep for your business to confidently enter into, these sorts of assistance programs can offer extra relief.

If you’re looking for a reliable accounting or CFO service, contact our start-up accounting and CFO services experts.

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3 Ways Small Businesses Can Get Paid With Online Payment Systems

Technology’s impact on the way organizations conduct business and interact with their customers has given way to major shifts in consumer expectations businesses should pay attention to. As online tools provide a higher level of convenience to the customer, they quickly come to rely on these conveniences all the time.

Online payments in particular have become a dimension of the sales process, which has quickly grown to become a standard expectation among a tech-savvy consumer base. As these remote payment methods become even more streamlined and simplified for the average consumer, businesses who can’t adapt accordingly will no doubt find themselves struggling to keep up.

For small businesses trying their best to mitigate expenses, implementing and maintaining online payment systems might seem like an expenditure, which will only threaten an already fragile cash flow. Fortunately, there are a growing number of ways to provide this level of accessibility while keeping your wallet intact. (more…)

Video: The Benefits of Using QuickBooks

To get in touch with Jen Lang, Luella Schmidt or one of our other Madison-area accountants, click here.

Video Transcript

Title Slide: The Benefits of using Quickbooks | with Luella Schmidt and Jen Hildahl

Luella Schmidt: The benefits of using QuickBooks are – this is where I’ll get all geeky and excited about this because the software industry around Quickbooks in the last 5 years has really exploded.

Jen Hildahl: The benefits of using QuickBooks is that is really the mainstream small business accounting software. So there are a lot of add-on tools that have come to the market since it is such a popular software system. (more…)