Six small business accounting tips for startup businesses
You start keeping track of both the number of calories you consume and the number of kilogrammes you weigh when you first make the decision to lose weight.
When you bring your new baby home for the first time, you probably take careful note of their height and weight and evaluate them in relation to the norms for their age group.
Your new business is not an exception.
Establishing a new company is a challenging and important endeavour. You may be in possession of an excellent concept or an innovative strategy; nonetheless, if your startup is unsuccessful in getting off the ground, it is unlikely that you will be in business for very long.
The fact of the matter is that your needs in terms of accounting are going to be very different from those of an established company, a retailer, or a huge firm with an annual turnover in the seven-digit figure range.
Let’s get one thing straight: your startup NEEDS an accountant on its side
The culture of startups is one of a kind because of how self-sufficient it is. You and your team take pride in your ability to fix problems, hack solutions together and work lean.
It’s a wonderful quality to have, but unfortunately, it’s not one that you can afford to carry over into other areas of your life, like accounting or finances.
Finance is the engine that drives any and all businesses. Your team needs to seek out the appropriate guidance in order to increase the likelihood that your startup will make it through the early, challenging stages of its development and mature into a fully-functioning and prosperous business.
Essential accounting tips for startup businesses
1) Sound systems are the foundation of good accounting
Accounting is more than just finding a reliable small company accountant in Melbourne to look after the numbers for you; it also involves setting up appropriate procedures to ensure that your startup’s finances are correct and well taken care of.
When you have the appropriate system, you are able to:
- Find ways to cut down on errors and blunders.
- Produce information that you and your investors are interested in automatically.
- Automate repetitive tasks such as pay runs, reporting, and invoicing, among others.
And all while utilising a single, straightforward platform!
Obviously, you can’t have a system that’s too complicated. When you’re just starting out, you have to operate efficiently, which means you might not have the manpower to devote to a more thorough strategy.
Our small business accountants in Melbourne will set you up with a cloud-based accounting system that will alleviate the stress placed on your team while simultaneously providing you with all of the data you require to make informed decisions.
In addition to that, we are able to make recommendations and put in place additional systems to ensure that all areas of the financial management of your business are simple and uncomplicated. This includes optimising the systems and procedures that are already in place.
2) Your business accountant does more than just report – it’s all about strategy
You, as the operator of a startup, undoubtedly realise the significance of having a solid plan. Even though your ideas might be groundbreaking, you still need a strategy to deliver them to consumers and expand your business.
What you might not realise is that accounting is about much more than simply providing you with the numbers; rather, it is about ensuring that your financial planning for the future is accurate. Accounting, in contrast to bookkeeping, is focused on the long-term picture.
And it may at times include assisting you in the development of a strategy.
Our Melbourne accountants for small businesses are able to comprehend your objectives, and then, by employing statistical analysis, they offer suggestions to assist you in achieving those objectives. We are an important member of your planning team, which is something that many business owners of startups don’t realise they have.
When you get together with your accountant(s) in the near future, make it a point to get their feedback; we have no doubt that they will be delighted to offer their perspectives.
3) Be ready to scale up
The life of a startup is uncertain. One minute, you’re going about your business as usual, and the next, you’ve just secured a significant investor or seen your one-of-a-kind product or service become widely available.
Because you can never be sure what the next day will bring, it is absolutely necessary to ensure that the accounting system you use for your startup is adaptable enough to keep up with the company’s growing success.
Cloud accounting software makes accounting simpler for businesses with a limited number of employees, which is one of the program’s advantages.
That is not the end of it. Nevertheless, cloud accounting is also scalable, and it can expand together with your company owing to a variety of packages and features that you may switch between without any disruptions in service.
4) Maintain a wall of separation between your personal and business finances.
This is a mistake that is made by all different kinds of small businesses, whether they are startups or not!
It is tempting to just use the accounts you already have. After all, it is less complicated, requires less effort, and results in you receiving your earnings immediately.
Nevertheless, there are also significant dangers associated with it:
- It puts you in direct contact with the liabilities and debts of the firm.
- Your personal savings will be depleted to pay for business taxes and costs.
- It will make your bookkeeping more difficult.
- You forego a significant number of tax advantages available to businesses.
Unfortunately, making the changeover can be difficult. Depending on how long this arrangement has been in place, it could take hours of labour to untangle your personal funds and business finances from one another.
You just do not have the time to deal with anything like that; fortunately, our small business accountants in Melbourne are able to handle this matter on your behalf.
5) Don’t forget: you need to attract investment
Accounting is a tool that is used by other organisations to make choices. Accounting is one of the tools that new businesses employ to accomplish this goal and to entice potential investors.
As a startup, you’ve got a wonderful idea. You will, however, require financial backing in order to transform that concept into a marketable product and a lucrative enterprise. When trying to convince investors to put their money on your side, having good accounting is essential.
And if you don’t have a decent company accountant, you can’t have proper accounting either!
A qualified accountant is aware of how important it is for startups to get funding and will produce reports that are geared towards this end in order to help your company.
In addition to this, we will provide you with guidance that you can use in order to make investing in your startup a more appealing option.
6) Make sure your accountant has full access
Once you have located a small business accountant in Melbourne that understands your startup and everything it stands for, you are required to grant that individual unrestricted access to your financial records.
If they are going to assist you in accomplishing your objectives, it is imperative that they are aware of everything concerning the financial operations of your firm.
In order for this to take place, it is necessary for them to have access to everything.
We completely understand how nerve-wracking it is to hand up so much control over your child to someone else. However, putting your faith in us will help you avoid a great deal of hassle in the future.
Essential tips for managing the financial growth of your business
The financial operations of your company will become more complicated as your organisation expands, gaining new customers, projects, and goods while also increasing the number of employees it employs.
Growth spurts are exciting times, but it is necessary to stay on top of managing the financials in order to avoid the problems that come along with them. The following is a list of the most significant things to think about when it comes to the growth of your finances and the health of your rising company:
Keeping your financial system up to date so that it can effectively manage the changes in your client base, internal teams, and supply chain is absolutely necessary. In many cases, a company’s economic pace is held back by unseen handbrakes in the form of antiquated computer systems and obsolete software.
The many advantages that can be gained from upgrading to a fully integrated, cloud-based financial management system like Xero can be summarised as follows: It provides you the capability of linking all of your company’s data in a centralised area, from where you are granted daily access to the most recent information and reports. You can also automate the distribution of information, which removes the requirement for sending several emails and leaving multiple voicemails, resulting in time savings and an increase in productivity.
Staying one step ahead of market trends and costs
You will receive the information you need to spot wasteful spending or outgoings with the help of technology that records daily sales and expenses.
This will allow you to optimise your business and obtain better pricing from your suppliers. You can also highlight the items or services that give the most considerable returns and build your marketing campaigns in accordance with those priorities.
Because you have access to and regularly analyse this data, you are able to respond to shifts in the market in the most timely and effective manner possible.
Spreadsheets are still widely used for accounting in many businesses, despite the fact that this method is not only inefficient but also prone to mistakes. An automated system that compiles your financial data and makes it available digitally to stakeholders will not only improve your workflow, but it will also increase your efficiency in budgeting, planning, and forecasting, which are three of the most essential components to a company’s fitness and future prosperity.
Don’t overlook the importance of efficient invoicing.
Because cash flow is the most important factor in determining a company’s overall financial health, it is imperative that important instruments, such as invoicing, not be neglected. Consider your company’s invoicing as an essential resource, just as you would a valuable supplier or a tool for conducting business. It is not unusual for certain jobs to require significantly more time during the expansion phase of a company because of the increased amount of work that has to be done.
Make sure that your bills are sent out on time, with clear terms for the date of the payment, as well as the options that are available. It is crucial to have a timetable as well as a system that is quick and precise in order to guarantee that your bills are sent out on time. Make sure that you have a follow-up reminder system in place that is both courteous and professional for customers who pay their bills late.
A business growth strategy. Do you have one?
Have you ever pondered the process of formulating a plan for the expansion of a business?
Your company needs to have a growth strategy in order to be able to continue to exist and expand in the market.
Extremely few businesses are able to make it past their first five years, and of those that can, the majority fail inside that first decade. Why do you believe this to be the case? The explanation for this is rather simple. Companies either do not create growth strategies that are tangible or they fail to execute them.
As the proprietor of a small or medium company, it is imperative that you get off to a modest start but maintain a consistent forwards momentum, meeting obstacles head-on and seizing changes wherever possible.
We have selected the most helpful suggestions to assist you in developing a business expansion strategy… Keep reading.
Develop a value proposition
Customers in today’s market are savvy enough to understand that they need to consider the value that you are offering. You need to differentiate yourself from the competition if you want to continue existing in the market over the long run and attract new clients.
To put it more succinctly, you should design a value proposition that elucidates the one-of-a-kind advantages associated with your product or service. Ask yourself why people should do business with you, and then use the response to persuade potential clients to do business with you.
Identify your customer
Only after you have a clear picture of your ideal client can you create a plan for the expansion of your company that will be successful. You decided to launch a company with a certain customer base in mind.
Are you trying to appease such individuals?
Are the things you create designed to meet the requirements of the people who buy them? In that case, you need to get your company looked at.
Determine who your target market is, then adapt your company to meet their needs.
Define key indicators
Determine the primary factors that have an impact on your company. Devote a greater amount of money and effort to the indicators that play the most important function in the expansion of your company.
Accounting is an extremely important indicator for almost all types of businesses. Low-priority sectors still require attention, but those efforts can wait until later on the list of priorities. If there is a need for modifications, you should be sure to make them measurable.
In that case, you won’t have any method of determining whether or not they are effective.
Check out your competitors
When formulating a plan for the expansion of your company, it is important to study your rivals. Are they performing better, or does your business have a competitive advantage?
If they are successful, it is likely that they are employing a variety of different strategies to get the attention of your audience.
Experiment with shifting your posture to see how the change affects the outcome.
Identify your strengths and weaknesses
When designing a strategy for the expansion of your firm, you should centre your attention on both your strengths and your deficiencies. You are able to make deeper inroads into the market by utilising your powers, but you are also able to work on your deficiencies and improve in those areas.
If you are already in the growth phase of your business, you might want to think about extending to new horizons.
Hire the best talent
If you want to be able to interact with your clients in an effective manner, you need to have highly inspired people working for you.
Employ a group of people that have a deep comprehension of the value proposition of your business and compensate them at a level that is comparable to other similar positions.
Creating a growth strategy for the company will require a significant amount of work. Because of the fluid nature of the markets, it is impossible to consistently apply the same trading strategy and expect profitable results. In order to maintain sustainable growth, you will need to adjust your strategy to account for the shifting environment.
Take things one step at a time since there is danger and ambiguity associated with each move. Consider the comments from the market, and make adjustments where appropriate. In addition, the information gleaned from your primary indicators can be put to use in the formulation of individualised expansion plans.
Grow Your Business
Is your company experiencing persistent growth, as well as an increase in profits? Is the way you live being improved by the way you run your business, both for you and your family? This is exactly what a successful business accomplishes for its owners, giving them the time and financial freedom they need to pursue the lifestyle they envision for themselves.
Unfortunately, many businesses are a burden to their owners, returning very little in terms of money, work satisfaction, and a good work-life balance. This is an unnecessary situation that occurs much too frequently. Signs that a company is in need of assistance include mounting debts, a low return on investment, inappropriate working hours, and an owner who is experiencing excessive levels of stress.
To help you achieve all you want from your business, Bookkept will conduct comprehensive assessments and provide you with detailed feedback and a workable strategy for taking your business to the next level. Our personalised, collaborative processes, combined with extensive knowledge and experience across various industries, translate into a market-leading edge for our clients.
We have found even the most successful businesses owners are open to improving their bottom line by employing a professional to assess their enterprise objectively. At Bookkept, we certainly believe in the adage “If it ain’t broke, don’t fix it…”, but our investigations usually uncover innovative ways of streamlining and simplifying a business’ financial and operational functions.
What is there to lose?
A business that doesn’t do very well! If you’d like to:
- Build a company that can function successfully even without your presence,
- Boost your overall financial return,
- Within the next five years, retire,
- Achieve a work/life balance of your design, then Bookkept can help.
The dynamic nature of our business improvement solutions enables us to assist you in achieving your objectives while simultaneously fostering the expansion and development of your company.
Improving profitability & cash flow
When trying to attract consumers, many business owners spread their nets too far, which results in a significant loss of both time and financial resources. There are a lot of people running businesses that are providing products and services that aren’t carrying their weight financially. Cash flow is hampered for many businesses because their owners keep accounting systems that are not well organised, both for accounts receivable and payable.
We could go on and on…
When it comes to analysing a company’s profitability and performance, only a skilled professional who is objective and has years of experience can know what they are looking at.
How can I benefit from a business assessment?
Our experts are able to assist with a variety of business methods that, when implemented properly, have the potential to radically change the fortunes of even the most failing companies. Our evaluations can also help to simplify and streamline successful encounters with our objective and practical recommendations to improve performance. The secrets to awakening the latent potential for achievement in your sector are manifold and varied, but they can be summed up as follows:
- Maintaining a steady flow of funds
- Analysing the potential for sustained profit
- Conducting research on the organisational make-up, procedures, and management
- Establishing a position on the market that is accurate
- Evaluating the policies governing accounts payable and receivable, to name just a few examples.
After we have finished our evaluation, we will continue to assist you in improving the profitability of your firm as well as its cash flow. Our all-inclusive plan will provide you access to the following:
- A conscious awareness of the most important aspects of your performance that require attention in order to make progress,
- Comprehensive plans of action
- Keeping track of your advancements as you work to execute change and
- Help in the process of putting in place new procedures and mechanisms.