Regardless of the type of small business industry you’re in, and fiscal responsibility is critical to ongoing success. This means not only detailed recordkeeping but also monetary analysis, financial projections, and long-term planning must be handled with finesse.
If finances aren’t your strong suit, you’re wise to employ the help of a professional advisor to help ensure you stay on track. Quality How can show you ways to boost your business finances via online advertising and social media outreach.
Startup Business Finances
One of the first steps in small business formation is developing a business plan. A business plan clearly lays out all of the financial elements of your business and includes incremental financial projections.
According to the U.S. Small Business Administration, this essentially helps you perform an analysis that estimates, based on market research, what your anticipated expenditures and income potential will be over an established time period. Having this information allows you to continually analyze your finances and make adjustments accordingly if projections don’t materialize as anticipated.
Bookkeeping and Recordkeeping
According to Accounting Department.com, solid bookkeeping and accounting practices are essential to not only efficient small business management and operations but also to adequately forecast your finances and be well-prepared when it comes time to file your taxes.
Keep track of all expenses and regularly compare your income and expenses to your projections to ensure you’re on track. If you are significantly over or under, you’ll need to regroup and assess why this is so. You may need to make adjustments to hiring, location, products, or inventory and re-evaluate short and long-term expenditures to ensure to stay on track.
Statements to Monitor
When it comes to issues related to the financial and operational functions of your business, there are numerous financial statements to factor in. As such, a high-quality software program can help simplify and streamline the process.
For example, banking statements, invoices, purchase orders, employee/contractor and vendor payments, and overhead operational expenses are all things that you should be tracking on a regular basis, as are profitability ratios, revenue growth, and capital efficiencies.
A program that allows you to categorize and calculate key financial statistics will be incredibly helpful, particularly if you can easily print reports and compare month-over-month finances.
What If Projections Are Wrong?
Tracking your finances should position you to recognize red flags before they become problematic, but being proactive is a critical part of this equation. If your revenue is significantly lower than projections, or if costs rise unexpectedly, you’ll need to pivot quickly to stay afloat.
Revisit your budget line by line, cut back where you can, and make an honest assessment of whether the problem you’re facing is short- or long-term. A qualified financial advisor can help you assess your situation and make educated and prudent financial decisions.
How to Do It
While some small businesses can warrant hiring an accountant or even utilizing an accounting firm for their financial needs, it’s advisable to learn more about the process yourself to ensure your business is financially protected.
Going back to school and sharpening your accounting skills with an online accounting degree can help you develop your business acumen. It can also familiarize you with standard accounting processes that can benefit your business in the long run. A benefit of online learning is that you have the option to work at your own pace from the location of your choosing, which can help contribute to a healthy work-life balance.
Small businesses, by necessity, often operate on very thin financial margins. As such, knowing where every penny comes from and goes is essential in short- and long-term budget planning and to ensure your business stays in good financial health. Quality How boasts several online vehicles to help you market your business and maintain a strong financial footing.
