Entrepreneurs are focused on starting and growing a new business. A watchful eye on financial health can ensure success.
The demands of a new business can certainly be exciting and time consuming; creating a viable product or service, establishing a brand and market presence, finding customer fit and many other mission critical tasks – but proper accounting and bookkeeping cannot be overlooked.
One recent report showed 28% of small businesses fail due to poor financial structure. Even if you start with a simple budget in an Excel spreadsheet, establishing a basic reporting system has several critical advantages which range from providing visibility into profitability and future projections to improving tax readiness.
Where to start:
- Cash Flow. Understand money spent and received by your business and how it is allocated (operations, infrastructure, etc.)
- Balance Sheet. This provides an overview of your company’s financial standing and looks at assets, liabilities, and equity.
- Profit & Loss. Looks at revenue, expenses, and other factors to reveal gross and net profit.
If pulling together even these key, initial reports seems daunting, consider the alternative. Financial errors or a lack of accountability could lead to overspending, overhiring, inaccurate or incomplete records, mingling of assets or bank accounts, overlooked or unpaid expenses, tax penalties, and more. One business consultancy claims inadequate accounting procedures can cost small businesses $100,000 or more, and 200+ labor hours to fix and implement a proper system.
What can you do?
If you’ve been proactive in creating basic reporting in a spreadsheet, consider loading that data into one of the many affordable, cloud-based, online accounting programs to help guide your bookkeeping, and also secure your information. You can also outsource the work to a professional accountant (typically at a low cost) and ensure thorough financial tracking and forecasting, tax readiness and support.
When introducing a new product or creating a new brand or company, making informed, calculated business decisions is critical. Begin the entrepreneurial process of “starting up” with useful financial data – or you may suffer the consequences later.
The consulting, accounting, and bookkeeping experts at EFPR Solutions can be your partner and guide during this exciting and important time in the life of your new business. Please contact us to learn more.
EFPR Solutions is a business consulting firm in Rochester, NY that provides staffing and outsourcing services in accounting, finance and human resources. To learn more about our experienced team of business consultants and how we can assist your organization, please call 585-486-0725, email firstname.lastname@example.org or follow us on LinkedIn and Twitter.