Just a few weeks ago I was fortunate to meet with a bunch of people at the cusp of something big! They’re in the process of starting their own business.
Starting your own business is both an exciting and nerve-racking adventure, I’ve been there. At the event I went to run by PushStart I was able to share with these entrepreneurs my experiences and the virtues of accounting software
First of all, it’s clear that not everyone who starts a business has the same level of accounting knowledge. For some the idea of managing numbers is overwhelming, while for others they may have studied an accounting subject or two at university. But I truly don’t think it matters. New online accounting solutions are making managing your own finances simpler, but even traditional desktop type products are really quite easy once you’ve had some training.
I get it, for some start-up business owners “budgeting” can sound like a dirty word. But it’s critical, and it’s much easier with accounting software. The question for any start-up is “how much runway do I have?”, which is a great way to describe how to assess your budgeting and cashflow so your business is capable of surviving through to profitability and then really take off!
At the event we demonstrated how the soon to be released Reckon One accounting solution helps start-ups set up a budget, but it’s a similar process in most programs – essentially put in as much information as you have about your projected income and expenses into your budget and stick to it.
When I asked who had a budget at the PushStart event most said yes, but when I asked who actively managed their budget it was a different story. Budgets have real purposes, they help your business make goals and stay on track – don’t lose sight of your big picture.
Budgets are not something that you should set and forget, you need to be checking in regularly and basing the figures on what’s really going on in the business. It probably goes without saying that if you’re managing the budget within the accounting program you’ll find tracking it against actual expenditure far easier than any paper system.
One of the more complicated ideas we spoke about at the PushStart event was setting up multiple budgets, a conservative, average and aggressive budget. You can have all three in the background and base activity on how your business is travelling against these budgets. This can be really great for activating your business quickly but does take time to set up.
It’s time to be honest – where is the money coming from? Most start-up businesses run pretty lean so there may not be much fat left to trim you could consider other ways to improve cash flow.
One of the best ways is to invoice on time and follow up on late payments owed to you. While this isn’t always easy for new comers to business ownership you will find if you act professionally and provide the expected product or service your customers they’ll be happy to rectify any missed payments right away.
But what if the customer doesn’t pay? How would this impact your cashflow? Accounting software is great for this as it’ll quickly show you who is late to pay, and show you visually where your cash is coming from and importantly where it’s going.
One of strongest points I often make with businesses is about understanding business performance today. So many business owners who’ve operated for years and years tell me they really just check in with performance month to month and never really consider how the overall business is performing until they visit their accountant.
New online accounting solutions are primed to shift this. The competitive landscape makes it more important than ever to get a grasp of business performance here and now. How good would it be to open up an app on your Smartphone anywhere at any time and visually see a dashboard of your business performance to the minute – a dashboard that shows every dollar in and out, as well as where it’s coming from. Let’s face it entrepreneurs want to make the most of their time and this can be a great way of getting stuff done during ‘dead time’.
New businesses are starting every day and start-ups are in a prime position to grab onto modern accounting tools that can help a new venture be efficient and effective. At the same time good budgeting habits still remain important to successfully running any business.
Tell us what financial information would your start up business benefit from seeing every day?