The First Steps to Budgeting Your Startup

One of the biggest weaknesses facing small business startups in an unsteady economy is misguided budgeting. Managing cash flow during the first months and even into the first few years of a company’s life means dealing with quickly shifting payrolls and cycling through suppliers to find the right fit among a potentially endless list of other financial hiccups.

Without a smart budget flexible enough to absorb the bumps, it’s easy to drown your good idea in over enthusiasm and carelessness.

According to research conducted by the University of Tennessee, 46% of failed startups succumbed to “incompetence” in categories such as: “No knowledge of pricing,” Lacking of planning,” No knowledge of financing,” and “no experience in record-keeping.”

When used effectively, a business budget is a powerful financial tool available to the levelheaded small business owner. Having the fiscal foresight to manage both short and long term obstacles is one of the keys to keeping control over where your business is headed rather than having to steer it where your cash flow demands it goes. (more…)

4 Ways To Manage A Profit Surplus

We’ve tried our hardest to offer solutions to a wide variety of money issues for all kinds of business owners through both our blog and our outreach to the local Madison startup community. If you’ve been following our advice each week, we hope this post should apply to you!

But regardless of how you might find yourself grinning proudly at your bank statements after starting your small business the right way, or making efficient changes when things went awry, exceeding your revenue expectations is a great feeling. No matter how much you make, the need for a management strategy is still there if you intend on keeping the door open to success. (more…)

IRS Says Yes! You Can Pay Someone As An Employee And A Contractor!

Much to the delight of both financial management firms and their clients alike, a major limitation that barred workers from serving as both employees and independent contractors within the same organization simultaneously has been lifted.

Thanks to an official inquiry submitted to the IRS concerning the possibility for someone to collect income both on company payroll as well as through accounts payable for work done elsewhere in the company, the agency has issued a ruling stating that given certain criteria are met, this practice is acceptable.

Ruling remains a case-to-case affair

Although the ruling could have major implications for those attempting to work in multiple departments within their company, it is by no means broad in its practical scope. The IRS will still look closely at the specific nature of each position and make judgments accordingly. (more…)

4 More Expenses That Can Affect A Startup’s Budget

As we’ve covered in the past, startups trying to evolve their brands into bigger organizations must first navigate a sea of expenses that can quickly sink them if they aren’t properly dealt with through a sensible budget early on.

With an intelligent approach to your business’ accounting practices, it’s possible to craft a financial plan that can absorb these potential setbacks with ease. Let’s go deeper into the possible fiscal pitfalls you might fall into through a careful examination of common startup expenses. (more…)

5 Ways To Boost Your Small Business Cash Flow

With spring in full swing and summer just around the corner, if you’re a small business owner who hasn’t been thoroughly reviewing your balance sheets prospecting ventures for better cash flow, the time has come to do so.

With an economy leaning largely against the crutch of entrepreneurs, innovative startups, and other business pioneers, knowing how to stabilize and grow your company’s cash flow is paramount if your eye is set on tangible profits.

John Roberts, Vice President for Small Business at Scotiabank sums this point up best saying, “successful entrepreneurs know that while their business may be profitable, cash is still king when it comes to growing their enterprise. Putting a solid cash flow plan in place gives entrepreneurs control of what flows in and out.”

Finding the balance between what flows in and out of your books certainly does not come naturally to many business owners, especially many entrepreneurs whose strategy revolves more around their inventive ideas than a careful approach informed by years of real-world business experience.

Here’s five ways to energize your cash flow effectively:

1. Pinpoint Your Cash Flow Woes

Don’t count on your expenses to disappear any time soon. Although they eat away at your bottom line, keeping them in check can give you the leverage needed to manage your expenses intelligently. Make a habit of reviewing your expenses as well as your suppliers to determine if you’re overspending on needless expenses or inflated prices.

Be sure to keep your eyes peeled for subtleties in savings you might not catch the first time around. For example, if you’re able to make payments to your suppliers early, many will negotiate discount opportunities with you. You can also use a credit card with extended grace periods to effectively slow the overall payment process and make transactions more manageable.

2. Get A Handle On The Condition Of Your Business

Don’t assume your business operates a certain way without taking the time to be an objective and realistic manager. Being pragmatic with your finances is essential if you want to minimize your risks and maintain a balanced budget.

Think of your cash flow as a thermometer you can use to take your business’ fiscal temperature. Define, manage, and monitor the factors that impact your cash flow including business expenses, payment terms, and sales volume among others.

Determine whether some factors are routinely emerging as the weak link in your cash chain and make the necessary adjustments before they have a chance to get out of hand.

3. Get The Most Out Of Positive Cash Flow Influences

Many credit card companies offer small businesses specially tailored loyalty cards geared towards making regular payments easier on a small business’ wallet. These sorts of deals usually offer incentives for common business transactions like buying office supplies, entertaining clients at restaurants, and even filling your gas tank.

Deals like these shouldn’t be overlooked no matter how small or insignificant they seem at the time. A few dollars here and a few dollars there quickly add up to quite substantial savings when calculated over a long period of time.

4. Acclimate To Shifts In Your Budget

No small business owner should count on his or her cash flow to stay stagnant. In fact, that degree of stability probably reflects a stagnant business rather than genuinely stable finances. Instead, be ready to adapt to a cash flow that evolves with your business for better or for worse.

Learning how to read the signs of a flow becoming increasingly problematic can be like a fire alarm going off in a building where you don’t yet smell the smoke or see the flames. In this way, it’s a great indicator for detecting inequalities or inconsistencies in your balances. By keeping a close eye on them, you can better assess the health of your small business over an extended period of time.

5. Eliminate Needless Expenses

By taking advantage of special offers catering to small business such as loyalty credit cards geared towards fragile small businesses, you can find access to a wide range of perks such as travel and rental insurance plans, and purchase security that can boost your small business through a carefully trimmed set of expenses. Extended warranty offers are also a great benefit, which allows small businesses to avoid extra monthly payments.

By actively pursuing offers made to help keep small businesses from drowning in payment after payment, you can keep your cash flow in a healthy state that will hopefully gravitate towards both healthy profit and a manageable set of expenses.

If you’re a small business owner swamped by the weight of your finances and you’re interested in hiring an outsourced accountant, contact us. Our start-up accounting and CFO services experts can provide you with personal guidance.

3 Ways To Gauge A Suitable Startup Salary

Perhaps one of the most difficult aspects of starting your own business from scratch is assessing how to divvy up your initial earnings with proper balance. Specifically, when setting your personal salary, it may be tempting to short yourself by being overly cautious with what you set aside for future business investments and other expenses.

Exhibiting a responsible degree of financial caution is by all means one of the most important things to remember when managing a new business in its infancy––especially in turbulent economic times. However, it is possible to sell yourself short when you are seeing success which can translate into personal and professional detriments.

Although it’s great to fall in love with your product or the service you provide, it’s important to keep your own finances in balance with what you provide. Here are some warning signs that might tip you off to a problem: (more…)