Tag: entrepreneur

Six Years in Business – Already?

Just the other day, someone asked me how long ago I started my business. I was surprised to realize that it’s been six years this week! I’ve never regretted the decision to parlay my entrepreneurial spirit and experience into a full-time business. Sure, it’s been a lot of work, but with diligence and good luck, I’ve achieved my goals. 

Anniversaries are milestones worth celebrating, and a time for reflection – to assess progress, identify improvements, and set new goals. Businesses that survive to celebrate many anniversaries and other milestones invest significant time and effort in these four activities:

  • Plan with Your Objective in Mind 

A business plan is a road map to get where you want to go and help to keep your “Eye on The Prize”. Unless you know what you’re reaching for, you can’t grab it. Set your overall objectives and describe the detailed steps to achieve them. Set interim milestones along the way to help measure your progress and keep you motivated.

  • Execute Your Plan

Actively work through the detailed steps in your plan. It’s exhilarating to achieve goals and move forward. Executing your plans also gives you opportunities to get more information. Use new information to adapt your plans and make course corrections. Also listen to how your network receives your message and adjust the wording to get your message across better.

  • Outsource Needs You Can’t Meet

Be realistic about aspects of your business where you do not have the necessary expertise or can’t take the time away from your core business to do it yourself. Legal, accounting, and social media are some areas where engaging an expert can accomplish specialized tasks, free up your time, and prevent you from making costly mistakes.

  • Give to Your Network

Answering general questions in your area of expertise and presenting at workshops gives are ways that you can share knowledge with your network and establish your credibility. Sharing tips and perspective helps to establish your brand and draw people to you and your business. Being generous is often its own reward, over the long run.

The last six years of being in business full-time have been hard work, fun, and rewarding – all at the same time. It takes a lot more than investing in these four activities to be successful. But businesses that invest in planning, executing, outsourcing, and giving back increase the probability that they will enjoy many future anniversaries and milestones.

Financial Basics for YEA! Entrepreneurs

Last week, I was thrilled to discuss business finances with the 2019 Class of the Arlington Chamber of Commerce Young Entrepreneur Academy, also known as YEA! In the YEA! Program, entrepreneurs grades 8-12, develop their ideas into robust business plans and launch their business. YEA! Entrepreneurs also pitch their business plans to an investor panel and compete for funding.

YEA! Entrepreneurs, like all business owners, need to know about planning and managing their finances. We only had an hour, so we covered three basic areas that support every entrepreneur’s success, regardless of age:

Separate Business Accounts and Financial Records

Open a separate business account soon as possible to avoid commingling personal and business funds. Apply for a business credit card to support cash flow needs and to avoid putting business expenses on your personal credit card. Establish separate financial records from records used to maintain your personal income and expenses. Separating personal and business finances gives you an isolated view of your business so you can better track your progress. Separate records also help to establish that you are operating business, not a hobby.

Track and Monitor Financial Activity

Keep a record of all business income and expenses up-to-date. Updated records allow you a clear view of your financial situation at any point in time. Expenses should be tracked by category, such as rent and advertising, so you know where your funds are going. No particular system or format is required for your financial records. The IRS just requires that financial records are accurate, complete, and provide enough detail to identify the underlying source documents. Produce and review monthly financial reports.

Adjust as Needed

A budget is a plan for your income and expenses, to prioritize your activities and provide a baseline to monitor your progress toward achieving your goals. Assess the significant variances between your monthly financial reports and your budget. Focus on the income and expense variances that relate to the most critical areas for achieving your business goals. Didn’t meet your budget? Don’t see it as a failure; see it as an opportunity to assess your plan, adjust your activities and try again.

My time discussing business finances with the 2019 Class of the Arlington Chamber of Commerce YEA! was fun. The YEA! Entrepreneurs asked sophisticated questions and shared experiences in their own business that I learned from. I’m so glad that the future business world is in these YEA! Entrepreneurs’ capable hands!

Financial Workshop Reflections

Workshops are a great way to share information that organizations can use immediately. Last week, I got an opportunity to speak with a room of entrepreneurs about three essential elements for a financially healthy organization.

 

Financial Essentials for Entrepreneurs covered three elements that must be in place for every organization:

 

  1. Financial Accounts

A separate financial account should be maintained for each business or nonprofit. It’s never too early to open a separate bank account. Each separate and distinct business should also get its own credit card to assist with payments and cash flow. Comingling personal and organizational funds presents a risk of not getting a clear, isolated view of business finances.

 

  1. Accounting Records

Accounting records should be kept for each organization to substantiate income and expenses. Keep those records up-to-date. You never know when something unexpected will come up. How would you know if you can afford it? Capture the date, amount, business purpose, and income/expense type using a method to that you can keep up with – or hire a professional to do it for you.

 

  1. Tax Compliance

Organizations must be properly registered the with the state, county, and local level, as applicable. Many counties and local jurisdictions have business property tax requirements. Employees? Got to pay employment taxes. Sales tax could also apply. Then, of course, is tax on net income for federal and state (depending on where you live or operate).

 

Up-to-date, clear financial information helps organizations stay ready to make an investment or decision. Bottom line, addressing the three essential elements described above are as good as “an apple a day” to keep your organization in good financial health.

Can Your Organization Afford Change?

How do you decide if your organization is ready to expand? Can you afford that new equipment purchase or that additional employee? What about adding a new service or product line?

 

Answering these questions takes reliable financial information. If the necessary information isn’t there, how good will those answers be? You could gather your team and do some guessing. But should your financial decisions be based on a guess? Probably not, if you want to stay in business or sustain your nonprofit.

 

Three actions will start you on the path to get reliable financial information when you need it:

 

  1. Build a Budget – Identify income sources, such as executed contracts and purchase orders. Estimate potential income from prospects and referrals, or based on historical data — if you have it. Determine all fixed expenses, such as rent and payroll. Estimate other expenses, such as supplies and inventory. Include occasional payments, like insurance.

 

  1. Track Cash Flow – Your budget reflects what you expect to happen. Tracking actual income and expenses in a cash flow format provides an instant view of your organization’s financial position. A clear and immediate financial view allows for informed financial decision making.

 

  1. Automate Where Possible – Automation increases accuracy and reduces the time needed to get financial information. It doesn’t have to be expensive or complex. Making it work depends on keeping the information up-to-date. Set-up at the beginning takes time, but it’s a worthwhile investment.

 

Stop guessing! Investing time and effort to budget, track and automate your financial information really pays off in the long run. Having reliable financial information at your fingertips goes a long way toward making the necessary financial decisions to sustain and grow your organization.