The What 

As a business owner, you probably are familiar with these two words: budgeting and forecasting. But what do they mean? Budgeting involves creating a detailed plan for income and expenses over a specific period, such as a month, quarter, or year. A budget typically includes projected revenue, costs, and expenses, broken down into specific categories such as salaries, rent, utilities, and supplies. 

Forecasting involves predicting future business performance, such as revenue growth, market trends, and cash flow. A forecast can be based on historical data, current trends, or both. Generally speaking, there are two responses from business owners regarding the matter of budgeting and forecasting: 

1. Those who see it as an essential part of their business planning and decision-making process, or 

2. Those who find it a tedious and time-consuming task (if you are in this category and do not have a qualified in-house accountant, it is highly recommended to consider hiring an outsourced staff accountant, for reasons we will mention later). 

Regardless of your feelings about this task, budgeting, and forecasting are crucial tools for managing finances, planning for the future, and making informed decisions. 

The Who 

In small businesses, the responsibility of budgeting and forecasting may fall on the owner or manager, who may need to work with an accountant or financial advisor. The reality is that most small business owners have little to no training in bookkeeping. Hence, taking on the responsibility of budgeting and forecasting seems daunting, and hiring a full-time in-house accountant may be out of the budget, so they often put it off and just hope for the best. This leads to discovering problems when it is too late. 

According to BLS data, nearly 20% of businesses fail within the first year, and by year five, the failure rate has increased to almost 50%. And according to a study by Jessie Hagen of the U.S. Bank, 82% of businesses fail due to poor cash flow management. And guess what? Budgeting and forecasting are key to managing cash flow. 

The Why 

Budgeting and forecasting are critical for small businesses for several reasons: 

1. Planning for the future: Budgeting and forecasting allow you, the business owner, to plan for the future by projecting revenue, expenses, and cash flow. This is essential in making informed investment decisions, hiring, and other strategic initiatives. 

2. Managing cash flow: You can avoid cash shortages by creating a budget and forecasting future expenses and revenue. 

3. Identifying potential problems: Budgeting and forecasting can help small businesses identify problems before they occur. You can identify areas of overspending or under performing and take corrective action before it is too late. 

4. Tracking progress: Creating a budget and forecast allows you to track your company’s progress over time. You can see how your company performs against the projections and adjust as needed. 

5. Securing financing: Securing financing is getting harder and harder during a financial downturn, and many lenders and investors are tightening the requirements. Having a solid budget and forecasting plan in place can increase your chances of securing financing. 

But What If I Don’t Have An Accountant 

By now, we can all agree that budgeting and forecasting are essential to the survival of all businesses. You are on board but overwhelmed. You are unsure where to begin, and hiring a full-time in-house accountant or having a full-blown accounting department may not be in your best interest right now. The perfect solution is to hire an outsourced staff accountant. The outsourced staff accountant is becoming more popular, particularly in small and medium-sized enterprises, due to the variety of services provided and the cost-savings. 

So, don’t put it off any longer; it is time to tackle this task head-on and take your business to the next level. 

When the economy takes a downturn, or when the market is volatile, a person looking to start a business may think that all hope is lost for their idea. At least until the economy starts to pick back up again. However, economic hardship has proven to be a great time to start a new small business. Other businesses are looking for ways to revise their budgets and develop new business plans to accommodate the changes in the economy. You can start your new business a step ahead with some recession savvy tools and tricks. Learn how to make the most of an economic downturn and get your new small business started on the path to success.  

1.  New Market

When the economy is trending downward, new problems arise. Your small business could rise to solve these new problems. Start brainstorming business ideas by determining where your customers’ pain points are. If you already have a business idea in mind, determine where your business fits into the customer’s needs. Even if these problems are coming to the forefront during an economic downturn, they may not be entirely new problems. Understand how customers were addressing the problems before. Learn who currently provides the best solution to the problem. Define why your business is better and why customers should switch to yours. Many customers are looking to make a switch during a downturn to cut costs or gain a more efficient solution.  

2. Lower Expenses

During hard economic times, other businesses are most likely selling off equipment, assets and supplies and much lower costs. Some businesses may be closing or transitioning to a remote model and selling their office furniture at a lower price. Other businesses are offering deals and discounts in an effort to sign new customers. Take advantage of these deals as you establish your business.  

3. Access to Funding for Small Businesses

Many times, the government releases funding packages to help stimulate the economy during a downturn. These packages are often available to small businesses, including ones that are just starting out. This may also include provisions for tax credits and incentives for businesses filling a niche left in the market by the trend in the economy. Another perk of starting a business during tough economic times is bank rates. There’s a good chance that banks are changing their rates to accommodate the economy and encourage spending. This means lower interest rates for a new business account. There is also a higher chance of getting approved for a higher credit limit than you usually would. Typically, they also reduce the penalty for late payments for lines of credit and loans. Investors are also usually still looking to invest in startups and small businesses, especially ones touting products that are higher in demand during the economic crisis. Startups are inherently risky, of course, but these investors are looking to move their capital from the stock market. Startups are their safest bet, providing them with more security and you with funds for your business.

Small business owners face a multitude of challenges every day, from taking care of the customer end of things to ensuring their products or services are the strongest they can be. When it comes to the financial side of business, it can be overwhelming at times to maintain cash flow. Competitors, inventory issues, and economic changes all have an effect on small businesses.

Fortunately, there are some simple ways to cut back on expenses and grow your income. You might start by acquiring the services of a consulting firm like NOW CFO that can help you with everything from funding strategies to working out a budget. Then, think about how you can make financial decisions and transactions as easy as possible.

1. Find the right bank account

These days, there are a wide variety of bank accounts for both personal and professional needs, and they all have different features. Do a little research to find an account that will help you effectively stay on top of your finances.

Look to open an account that links with your payroll software, providing a streamlined and efficient way to pay your employees. The best business bank account will also have benefits like free instant deposit, high-yield interest, and an easy-to-use mobile app which allows you to handle your banking needs right from your smartphone. Having access to so many features will take the guesswork out of banking and give you some peace of mind when it comes to your business’s finances.

2. Cut expenses

Once your banking is squared away, it’s time to look at your budget and expenses. Most small businesses have a number of small expenses that really add up over the course of a year. The good news is, many of these can either be consolidated or eliminated, including monthly fees for software access, subscriptions to streaming services, or payment systems and credit card companies.

The best way to get started is to look for similar services that are free or discounted instead. Google offers a ton of free services and products, from email to spreadsheet and word processing platforms. Contact your preferred credit card companies to find out if they have a small business account that would benefit you, or consider changing your payment system to one that offers simple services in exchange for a lower monthly fee.

Keep in mind that you also have the option to deduct several expenses throughout the year, so it will be crucial to keep detailed records for tax time.

3. Branch out

After cutting back, it’s a good idea to look for new income opportunities. There are many ways you can market your business without adding stress or hours to your day, such as adding to your social media presence, creating engaging video content to share with customers, teaming up with other local businesses for promotions and events, and utilizing online advertising. Get creative and plan a strategy for different times of the year. For instance, if you own a floral business, look for ways to get your name out to high schools during prom season.

4. Stay on top of your invoices.

If you don’t have a great organizational system, you may be losing money. Cutting back on expenses and looking for new opportunities are both examples of preemptive measures, but your invoice and billing system should be well maintained every day. Take a look at the amount of time it takes to recover payment after an invoice goes out — a process that NOW CFO can help with — and consider changing things up for extra-large orders. For instance, you might require a deposit for orders over a certain amount to protect yourself.

Cashflow can be unpredictable for small businesses, but with the right moves, you can keep your finances in good shape and prevent setbacks. Utilizing professional services will ensure smooth transitions as you make changes and will help you reduce stress throughout the process.

Happy wife, happy life? More like happy accountant, healthy business.   When it comes to running a business, your accountant can be one of your greatest allies. With a strong accountant to client relationship comes healthy business finances and a business that thrives. Use these five simple tips to maintain a strong relationship with your accountant. When it comes to

Maintain Records

Many businesses utilize a cloud based accounting system to maintain the records of their company. This does make it easier to compile financial data into reports and may even aid the tax filing process. However, while software does make day to day operations in your business easier, it may ultimately make things more difficult for your accountant. To combat this, maintain copies of things like receipts and invoices for major transactions either digitally or physically. That way your accountant has all the information they need to keep your business running smoothly, even in the event of an issue or an audit.  

Stay Organized

Those records are most useful to your accountant if they are well-organized. Not only will that make their job easier, it will also save your business time and money in the long run. Many types of software allow for digital scans of receipts that will be organized according to your existing method. If your company’s software doesn’t allow that, consider a filing method that arranges your documentation by type or date. This way, your accountant can easily pull the files they need when they need them.  

Transparency

Maintaining a policy of complete openness and honestly with your accountant is crucial to your working relationship. Hiding things from your accountant can result in aspects of your business’ health being overlooked. Dishonesty about things like income and taxes can result in legal implications for both you and your accountant. In order to have a relationship with your accountant that makes your business the best it can be, maintain total transparency with your accountant.

Communication

A great accountant doesn’t just work with the numbers, they also take a holistic approach to improving every aspect of your business. This includes advice on business issues, strategies for big decisions and more. Your accountant brings a lot more value to your company than just great financial reporting, and the best way to get this information is to communicate openly with your accountant. Let them know when anything in your finances or overall business changes in real time. Don’t wait until tax season or an emergency.  

Ask Questions

Remember that your accountant is there for you and your business. Don’t be afraid to ask them questions. Call your accountant or shoot them an email when something comes up that you would like to ask them about. Running a business can be difficult, and so can maintaining the finances of that business. Often, your questions can help your accountant spot problem areas in your business before they become a bigger issue. Your accountant is happy to help your business thrive.

When the economy takes a downturn, or when the market is volatile, a person looking to start a business may think that all hope is lost for their idea. At least until the economy starts to pick back up again. However, economic hardship has proven to be a great time to start a new small business. Other businesses are looking for ways to revise their budgets and develop new business plans to accommodate the changes in the economy. You can start your new business a step ahead with some recession savvy tools and tricks. Learn how to make the most of an economic downturn and get your new small business started on the path to success.  

1.  New Market

When the economy is trending downward, new problems arise. Your small business could rise to solve these new problems. Start brainstorming business ideas by determining where your customers’ pain points are. If you already have a business idea in mind, determine where your business fits into the customer’s needs. Even if these problems are coming to the forefront during an economic downturn, they may not be entirely new problems. Understand how customers were addressing the problems before. Learn who currently provides the best solution to the problem. Define why your business is better and why customers should switch to yours. Many customers are looking to make a switch during a downturn to cut costs or gain a more efficient solution.  

2. Lower Expenses

During hard economic times, other businesses are most likely selling off equipment, assets and supplies and much lower costs. Some businesses may be closing or transitioning to a remote model and selling their office furniture at a lower price. Other businesses are offering deals and discounts in an effort to sign new customers. Take advantage of these deals as you establish your business.  

3. Access to Funding for Small Businesses

Many times, the government releases funding packages to help stimulate the economy during a downturn. These packages are often available to small businesses, including ones that are just starting out. This may also include provisions for tax credits and incentives for businesses filling a niche left in the market by the trend in the economy. Another perk of starting a business during tough economic times is bank rates. There’s a good chance that banks are changing their rates to accommodate the economy and encourage spending. This means lower interest rates for a new business account. There is also a higher chance of getting approved for a higher credit limit than you usually would. Typically, they also reduce the penalty for late payments for lines of credit and loans. Investors are also usually still looking to invest in startups and small businesses, especially ones touting products that are higher in demand during the economic crisis. Startups are inherently risky, of course, but these investors are looking to move their capital from the stock market. Startups are their safest bet, providing them with more security and you with funds for your business.

At Better Accounting, we believe that you can’t know where your business is going unless you know where your business has been. Hiring an expert bookkeeper is the first step to creating a sound plan for the future of your business. With timely and accurate financial data and solid bookkeeping expertise, our bookkeeping staff can help your business onto the path of increased profits and growth.  

Data That Matters

An expert bookkeeper will interpret complex financial data to show you how your business is doing. For example, are your sales higher than they were last year? Are you hitting your sales goals? How do these numbers compare to the industry standard? Each of these questions can be answered with some data from your bookkeeper. This financial data can measure your progress toward your business’ goals and to set new goals for the future.  

Information to Keep Your Business Moving Forward

Your bookkeeper will not only help you interpret your financial data. They will also create easy to use reports that you can use to measure your company’s progress. These include common reports like profit & loss statements, but also extend to not so common reports that can really help you understand the dynamics of your company’s finances. Things like cashflow statements, which show how changes in your balance sheet accounts and income affect your access to cash. Cashflow statements project your company’s ability to pay bills and make payroll in the short term. They can be forecast out to show how your cashflow will be affected by certain business changes down the road. Your bookkeeper’s reporting can also help you understand the trend in your business’ finances. They may create profitability reports for you that show how well your company is making money. Your profitability will usually be compared both to a previous period in your company’s financial history and to the industry standard or a competitor. That way, you can keep doing what your company is doing well, and adjust for the things your company is not doing well before it becomes a larger issue.  

Big Business Help, Small Business Prices

The cost of good bookkeeping has a big impact on small businesses. This is especially true when your company maintains a full time or part time bookkeeper on staff. In fact, Most small businesses can only afford one part-time bookkeeper once the cost of hiring, training, salary and benefits is factored in. Additionally, many small businesses do not even have an appropriately sized workload to justify maintaining a bookkeeper on staff at all. Better Accounting offers a solution to this dilemma. Our outsourced bookkeeping consultants have years of experience in a variety of industries, in companies of varied size. With our business model, you pay only for the hours you need a bookkeeper. We take care of the rest. This way, you get all the help you need from an experienced bookkeeper at prices you can afford.

Small businesses don’t get a whole lot of attention in the business world. Business reporters seem to only give press to big businesses—their profit and loss data, their newest product, a corporate scandal. Yet, 99 percent of all businesses in the United States are small businesses. Small businesses are the lifeblood that keeps the American economy functioning.  

Small Business: The Engine That Keeps the Machine Running

According to a report issued by the Small Business Administration (SBA) in 2019, small businesses account for 44 percent of economic activity in the United States. Small businesses create two-thirds of new jobs and deliver 43.5 percent of the United States’ gross domestic product (GDP). In addition to keeping the economy running, small businesses also lead the way in innovation. Small businesses produce 16 times more new patents per employee than large patenting firms do. Small tech startups with fewer than 5 employees account for a large number of these patents. Not only that, but small businesses reflect the diversity of the United States population in a way that the employee base of large corporations do not. 36 percent of small businesses are owned by women. 9 percent are owned by veterans. 14.6 percent of small businesses are owned by people of color. This includes 2.3 million Latinx business owners, 1.9 million black business owners and 1.6 million Asian business owners.

Winning Against the Odds

Despite providing the economy with an overwhelming number of benefits, small businesses don’t receive the same government support as large corporations. Small businesses do not receive the same tax breaks that are provided for large corporations. Small businesses also don’t receive the same local and state incentives for things like production facilities, or research and development. Large companies can receive federal bail-out money in times of financial turmoil, an option that is not available to small businesses. Small businesses have the odds against them but continue to thrive. They bring jobs and revenue to the local economies by offering jobs, local products, paying sales and property tax, and using local vendors and supporting services. In fact, a recent study shows that for every dollar spent at a small business, 68 percent funnels back into the community. Compare that to the 46 percent that funnels back from large businesses. Many surveys even show that individuals have more trust in local small businesses than they have in larger business concerns.   Small businesses don’t get a whole lot of attention. CEO’s of large companies fill the cover of magazines. Large businesses typically consume the business news with their financial data. Yet, small businesses are the epitome of what is keeping America going. Small businesses are the unsung heroes of the United States economy.