Doing your best to get your young startup or small business off the ground and on the road toward profitability? In this economic climate, that road can prove to be a bumpy one, especially for those making their first foray into entrepreneurship.
Even for those who have years of business experience under their belt, going in a new direction or starting over from scratch can be equally daunting without a solid financial plan and a detailed list of possible pitfalls.
There are dozens of financial problems that can easily fly under your radar, but some may be hiding in plain sight. Whether you consider them essential elements of a successful business or you simply aren’t tracking your expenses in full, here are three parts of your business you may be surprised aren’t worth their weight when it comes to moving forward.
1. An underqualified staff
While personality, likeability, and eagerness are all extremely important, hiring unqualified people to positions that require a more skilled individual can turn into an anchor for your earnings over time.
While young, eager workers can certainly bridge knowledge gaps quickly, those who require lengthy instruction and investments in internal training courses can be a significant burden on your company wallet, especially if you’re hiring multiple people at once who each require different training.
While some instruction is necessary for almost all new hires, it’s worth it as an employer who may or may not be bootstrapping expenses to wait for the right candidates. Training for a job is one thing, but teaching a skill is a whole different story.
2. Unnecessary office space
Although the stigma of the business office has been engrained into what we envision a business to look like from a cultural standpoint, the idea that every small business or startup needs to immediately invest in a dedicated office couldn’t be further from the truth.
While some businesses require an office depending on the kind of business they do, the monthly costs associated with an office can be immense when every component is listed out. Rent, insurance, internet and phone service, furniture and all the upkeep can turn into a black hole you can avoid completely with a little ingenuity.
If you don’t absolutely need an office, look into the many options available for virtual offices. This software allows you to conduct video conferences, share files, chat, and perform other communal tasks you would normally do in person at a fraction of the cost.
3. Undercharging for your products and service
While startups and small businesses are often forced to take on every client or customer they possibly can when they’re first getting off the ground, it’s important not to let this continue on after you’re stable enough to pick and choose the work that has long-term earning potential.
Undervaluing your service to the point where clients aren’t paying you what it’s worth will ultimately result in a loss for you no matter which way you look at it. If a client is fervent about not being able to afford what you have to offer, it’s not you, it’s them. If they can’t swing the bill, they should be the ones reevaluating their move.
What’s the bottom line? Don’t put blind trust in any of your expenses no matter how essential they may seem at first. As a budding business, you need to keep an extremely watchful eye over your finances at all time. If your accounting task is simply too much for you to handle, we’re here to help.
If you’re looking to outsource your bookkeeping to focus on moving your business forward, contact our start-up accounting and CFO services experts for assistance.
Photo Credit: williamhartz via Compfight cc
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.
At the launch of any start-up company, owners are faced with one pervasive thought: expense. Money flows out in a thousand different directions and revenue is a mere star on the horizon. These initial expenditures come at the same time you as an owner are attempting to map out future, recurring expenses. And in this frenzy it’s easy to forget a few.
To ensure you don’t find yourself a month into operations faced with surprise bills or lacking an essential resource, review this list of commonly forgotten expenses and account for them in your budget: (more…)
Printer ink price vs. other liquids. (via http://reflectionof.me/relative-prices-of-different-liquids-1)
If you’re a small or medium-sized business owner, you know just how much of a hassle it can be to keep up with paper and ink expenses. Gratuitous paper use hurts the environment and can be very costly. And speaking of that, I’ll just refer you to this internet-famous graph to the right to tell you what you already know: printer ink is incredibly expensive.
But never fear, 21st century technology, as it often does, has provided a solution to cut down on paper and ink expenses: mobile and online time and expense reporting. Besides the financial boost, your company will experience a host of benefits by investing in automated time and expense solutions: (more…)