Every business will experience a lack of cash at some point regardless of its size or the industry in which it operates, but for SMEs, start-ups or home-based companies, growing your business with very little cash flow can be nearly impossible. If you’re a small company, securing outside funding isn’t always easy. There are ways, however, to grow your business without having to spend lots of money. First off you can open up a business savings account.
Every business’ biggest tool has to be the internet, so make sure you have a good web presence from the outset. Being able to put yourself in front of your customers 24 hours a day, seven days a week is absolutely invaluable, especially now that most consumers turn to the internet first to find services or products. Essentially, a good web presence lets you market yourself worldwide and helps you compete with your larger contemporaries. You could try getting a small business loan.
Don’t be afraid to put yourself out there and be part of the local business scene. Joining anything from business and trade organisations to working mums’ groups and freelance forums will help you meet a number of business allies and hopefully provide more opportunities to develop sales. Get involved in client-run focus groups or look to partner like-minded freelancers in your industry who offer slightly different skills from you. The likelihood is you can promote each other’s talents and services and secure more business together. These days everything is more accessible online and it is way better to make sure you are constantly updating your business so your customers keep coming back to you. A way to keep track of this is by get this reputation management software.
Go for inexpensive advertising opportunities, such as having car decals with your business details on family vehicles, regularly sending out press releases or contributing to trade magazines or websites. Take advantage of free classifieds and leave your business cards in strategic places, where potential customers may be passing by.
Take on help if you need it
Don’t assume that you can’t take on staff. OK, so you may not have the spare cash to pay an extra salary right now, but consider taking on a commission-only salesperson instead. This way, you only pay him what he earns. Alternatively, look for an intern or someone wanting work experience in your field. College and university students are a great choice as they want experience, although they may only be with you for short periods such as holidays or weekends.
Try to make the most of your reputation by holding seminars or training sessions to share your skills and techniques with others. Make sure you charge a small fee for attending and then get networking. Alternatively, write and publish white papers on your own industry area. Whether it’s ‘Writing for the Web’ or’ accountancy for oil contractors, others in your industry will want to know the latest developments and knowledge and will help make you an expert on the subject in your sector. Ask your potential audience to sign up with their business details to learn more or receive further articles, that way you can expand your contact list at the same time.
Finally, consider becoming a big part of the local community, from sponsoring local trade shows and high-profile events to getting involved with local activities. Every time your name is mentioned you’ll be getting great press, raising your profile and enhancing your company’s credibility.
Why Is Accounting Important for Business?
An accounting software is important for business as a way to document financial activity and learn from the numbers. Your business needs basic accounting to report income on tax forms and keep track of funds flowing in and out of your bank accounts. But accounting information also provides valuable insight into operations, showing trends and opportunities that can help make your company more profitable. Tax reporting agencies require you to keep books at a minimum level that tracks income and expenditure. But if you have the drive and interest, you can take your accounting processes to an entirely different level, and use them to create a smarter and more financially viable business.
Types of Accounting Businesses Need
Tracking income and expenditures: Your business is required to fill out tax forms based on both gross revenue and net income. State and local excise taxes are calculated as a percentage of revenue. City, state and federal income taxes are based on your net profit after subtracting deductible expenses from gross revenue. To calculate these amounts correctly, your business must track and tally gross receipts as the basis for revenue numbers, and add up all expenditures as the basis for business deductions. When reporting gross revenue, you’ll need to break down your earnings into categories such as wholesale and retail. When calculating net profit for income taxes, you’ll need to divide expenditures into categories as well, such as materials, payroll, rent, utilities and auto expenses.
Payroll accounting: In addition to calculating how much to pay each employee based on wage or salary and hours worked, your business must also withhold and pay the Social Security, Medicare and income taxes that your employees owe, along with matching employer contributions for Social Security and Medicare. You’ll also have to pay unemployment insurance and industrial insurance into your state’s funds, based on how much your employees work and how much they earn. Your business will need a comprehensive and up-to-date payroll accounting system to keep track of these numbers and to pay all payroll taxes and file all payroll tax reports when they are due.
Cash flow accounting: Your accounting system should also include tools for tracking the availability and need for cash. If you use a cash-based accounting system, your weekly and monthly figures will give you a reasonably good idea of how much you have coming in and going out. If you use the accrual system of accounting, you may record a sale as revenue before you’ve actually been paid for it, so you need another way to monitor the availability of cash. Whether you use a cash or accrual system, your cash flow may also not directly correlate with your reported income and expenditures if you’re paying back loans, or if you’re depreciating equipment that you’ve already bought.
Balance sheets: A balance sheet is a snapshot of your financial picture at a particular moment in time. It includes information about what you own and what you owe. Your list of assets will include cash in the bank, equipment you’ve purchased minus the amount it has depreciated and accounts receivable or sums that are owed to you for sales you have already made. The list of liabilities on your balance sheet will include balances due on loans and credit cards, and shorter-term debts you’ve accrued such as accounts payable and outstanding utility bills. By subtracting your liabilities from your assets, your balance sheet shows your company’s current net worth. When you create balance sheets over time, you can see how your earnings and expenditures have played out and created wealth or debt. A balance sheet also shows how much of your net worth is liquid, and how much is tied up in assets that don’t provide readily available cash.
Operational reports: In addition to the accounting reports that your business is required to complete by tax agencies and lenders, you can create customized reports that track everything from the dollar value of the product your line produces in an hour, to the sales figures for each of your sales personnel. These numbers are critical to making strategic decisions. They can help you to identify which aspects of your business yield the most profit and are most worth nurturing. They can also call your attention to difficulties that can be corrected, such as aspects of production that take too long and cost too much.
How Businesses Can Do Accounting
Your business can either do your accounting in-house or hire an outside professional to help with the process. Many companies use a hybrid of these two approaches, having internal personnel complete some tasks such as basic bookkeeping, and then contracting with an outside accountant to complete annual taxes.
In-house accounting offers the benefit of having someone who knows your business in-depth, recording your earnings and expenditures. A bookkeeper who is deeply involved with your business will be able to identify and categorize items on receipts, determining whether they are materials included in your cost of goods sold or supplies that you need for behind-the-scenes organizing. However, an in-house bookkeeper may not have the professional expertise that an outsider can bring to the mix. This knowledge is useful for creating systems such as your initial bookkeeping setup, and also for catching nuances such as expenditures that aren’t legitimately deductible.
An outside bookkeeper can bring experience and perspective to your company’s accounting processes. As a professional, this bookkeeper has likely seen the books of a range of businesses and can show you how to update your systems so they provide the information you need and can be understood by other professionals such as bankers and tax auditors. However, an outsider may not do as good a job as an insider at understanding how your business works and what information you may find most useful. For example, your accountant probably won’t understand the types of inventory you carry from the point of view of a merchandiser. Yet information about how different categories of merchandise are moving can be vital for fine tuning your purchasing.