When you’re a small business owner, every dollar counts. If you’re new to business, then chances are your revenue stream isn’t predictable yet. You could be making $10,000 one month and $1,000 the next. Often, the line between failure and success is razor-thin, and you need to maximize every possible bit of revenue to stay afloat.
Here’s a phrase you never thought you’d hear from a CEO who just raised seed funding: “Nobody told me how difficult success can be for a startup.”
This may not sound like much of a problem. But the more I thought about it, I realized that many early-stage businesses start out with blazing potential and burn out before they reach it.
The last few weeks of every year fly by, but before you get swept away by the hustle of planning for 2017, set time aside to bring the current year to a close. I’m not talking about hosting an office holiday party to celebrate your company’s achievements, holding annual reviews to appraise individual and overall business growth, or dishing out employee bonuses. You should definitely consider doing those things!
Whatever else you do, just remember that your most important end-of-year financial task is closing your books.
A quick intro from the editor: Steve Kornreich heads inDinero’s NYC-based consulting team that serves entrepreneurs east of Chicago. He is the proud father of a soon-to-be 5-year-old cockapoo named Mickey.
I recently had the pleasure of joining founder and CEO of Justworks, Isaac Oates, and Founder and CEO of LawTrades, Raad Ahmed, on a panel sharing personal success stories and practical advice to entrepreneurs of all stripes. While I haven’t personally started a business, I do have the breadth of experience working with countless startups and watching them grow. I’ve worked for a big Wall Street firm and an early stage startup (we, unfortunately, did not make it), and led business development efforts for small and mid-sized financial institutions at Gartner before coming back to the startup ecosystem with inDinero.
Maybe you hate spending your Saturdays in spreadsheets, or maybe you hit a few major milestones and are outgrowing your current system. Regardless of what’s driving you to outsource your accounting, there are a few factors you must take into account during this transition.
Seasonality is a common experience many businesses face when they’re building out their budget. There are obvious examples in the form of tanning salons and ice cream shops to tax firms and event space venues, but even a digital agency or SaaS startup can experience high and low points in cash flow throughout the year.
Here’s a few tips on how your business can plan for seasonal slumps and take advantage when business is booming.
Metrics equal money. This goes beyond ad impressions, website clicks, and form fills. In order to make the best decisions that impact your retail business’ bottom line, you need the ability to derive actionable insights from a full scope of business data. The first step to leveraging this data is understanding the key metrics that inform it.
If you surveyed business owners for their feelings about accounting, you’ll likely get a mixed bag of responses. While some embrace the financial world and use it as a learning tool, others dread it and think of it as a necessary evil, and then there are those who are just too terrified to check on their finances altogether. Love it or hate it, your business can’t live, let alone thrive, without a good accounting backbone so it’s important to put a solid system in place that you can trust.
Even before launch day one thing is certain: It costs money to start and run a business. We all intuitively know this to be true because we know that simply existing in the world (as a business or individual) comes with expenses. It is one of the biggest barriers many undercover entrepreneurs see between their current lives and their dreams. And while we all know the benefits of getting as much as bang for our buck as possible, even the smallest startups with little to no overhead and minimal cash burn must spend money to grow or stay afloat.
Just like your first steps into #adulting can be financially wobbly, so can the first year (or few years) running your own business. You might have the wisest, most experienced mentors and investors in your court, but there are going to be things that nobody can prepare you to face. Like everyone else, even the most seasoned entrepreneurial vets are limited to their own experiences and can only know so much about what the future holds for your particular startup.
Pop quiz! Do you know if your business is on track to hit its financial goals for the year?
Sorry to put you on the spot like that and don’t let it make you sweat. Truth be told, an estimated 90 percent of small businesses are unable to produce dependable financial statements when prompted. And it’s probably safe to assume that even if they could access accurate finances, most small teams wouldn’t know how to turn those numbers into business insights to put into action.