Don’t set and forget your budget

Starting your own business is both an exciting and nerve-racking adventure, I’ve been there. Just a few weeks ago I was fortunate to meet with a bunch of people at the cusp of starting their own businesses.

At the event I ran by PushStart, I was able to share my experiences and the virtues of accounting software with these young entrepreneurs.

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 accounting 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. In this article I’ll cover off a few of the things I shared at the PushStart event.

Budgeting

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 ready for take off!

At the event we demonstrated how the soon to be released Reckon One accounting solution will help start-ups set up a budget, but it’s a similar process in most programs – essentially put in as much information about your projected income and expenses into your budget and stick to it.

When I asked those at the PushStart event who had a budget most said yes, but when I asked who activity 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 every day. It probably goes without saying but 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. This can be really great for activating your business quickly but does take time to set up.

Cash flow

It’s time to be honest – where is the money coming from? Most start-up businesses run pretty lean so while you may not be looking to trim the fat consider other ways you can improve cash flow.

One of the best ways is to invoice on time and follow up late payments 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.

Get visibility

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 and 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 your new venture be efficient and effective, while at the same time good budgeting habits still remain important to successfully running any business.

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