Category: Budgeting

6 Realistic and Practical Money Saving Tips and Ideas for Your Small Business

Posted on | by Jessica Weston | Leave a Comment on 6 Realistic and Practical Money Saving Tips and Ideas for Your Small Business

Saving just a small amount of money here and there can really boost the bottom line of your small business. If you’re tired of hearing abstract advice then read on for straightforward, practical tips to help cut down on costs and maximise your profit margins. 

1) Switch to PPC Advertising

Pay-per-click (or PPC) advertising is far more cost-effective than traditional ad campaigns because it allows you to target a more precise audience, helping you to squeeze more out of your marketing budget. You also only pay for the clicks you receive, rather than the number of impressions the ad gets, so this really helps maximise your ROI.

2) Outsource 

Outsourcing allows you to increase productivity whilst keeping employee costs low. For one thing, there are no pension contributions, sick leave or vacation time to worry about with freelancers or contractors. Furthermore, outsourcing more of your work allows you to convert fixed costs to variable costs, so you pay for the man hours you need in accordance with the volume of work. This makes it easier to save money during quiet periods. 

3) Negotiate with Vendors

A vendor’s named price isn’t necessarily the final word on what you will pay them. It’s always worth attempting to negotiate better prices, because you may end up saving yourself hundreds of pounds or dollars each month! 

4) Seek Cloud Based Solutions

Cloud based software can save you a significant amount of money by eliminating the need to purchase, maintain and upgrade expensive hardware. Cloud based software is also easily scalable and allows you to maintain organisational agility, and it’s a big space-saver, too. 

5) Go Remote

Telecommuting can be a huge money saver for businesses. When employees work from home, businesses instantly save money on utility bills, office supplies and even hand soap and toilet paper. By encouraging some employees to go fully remote, businesses can also move to smaller office premises and thus save even more money on rent and furniture. Alternatively, you could allow all employees to work flexibly and introduce “hot desking” rather than having a designated desk for every employee. In fact, research by Forbes found that by allowing staff to work remotely 50% of the time, companies saved an average of $11,000 per year per employee.

Furthermore, allowing remote working can allow you to get more out of your staff. There’s a wealth of evidence to suggest that remote workers are more productive. A study by Atlas Cloud found that remote workers put in an average of 26 extra days over the course of the year, which accounts for a whole months’ worth of added productivity at no extra cost to their employer. 

6) Hire Based on Mindset, Not Experience

You can train an employee up but it’s very difficult to fix a negative mindset. Hiring smart, eager-to-learn graduates is a great way to attract talent to your company whilst paying an entry-level salary. Furthermore, you won’t risk hiring employees who are set in their ways and you will be able to train your staff to do things exactly as you like them with minimal resistance.

Summary 

By employing these tips you can cut down on costs and boost your bottom line without making huge sacrifices that could reduce your output or antagonise your staff. Saving money for your small business is about finding smart solutions rather than hacking away at your budget, and these tips will help you to do just that.

Top Seven Tips for Accurate Cash Flow Forecasting

Posted on | by Jessica Weston | Leave a Comment on Top Seven Tips for Accurate Cash Flow Forecasting

Do you want to know how your business will fare in the future? Apply the following methods to improve your forecasting.

Forecasting your company’s cash flow helps minimise potential risks and can indicate if the company is in a position to grow.

Proper cash flow management is a given. But monitoring all the money coming and going doesn’t always provide all the vital information you need to make accurate predictions.

The following tips and areas of focus should contribute to a better strategy for your forecasting.

Tip #1 – Estimate Future Sales

The accuracy of cash flow forecasting relies on multiple variables, of which arguably none is as important as the sales forecasts.

To improve accuracy, the estimate should depend on the following series of factors:

  • Market share
  • Resources
  • Competition
  • Pricing

Tip #2 – Estimate Profit and Loss

After your sales projections, you need to factor in the projected costs, too. This gives you more information about your profitability.

Of course, you have to know both the expected revenue and the cost of sales to estimate projected gross and net profits.

Tip #3 – Perform Monthly Sales Estimates

Some businesses don’t turn out enough data in a single week to make accurate projections. This happens because customers sometimes delay payments. Or, the money simply doesn’t come through in time to match the daily revenue on the books.

For that reason, it’s important to stick to monthly estimates with consideration to any known delays.

Tip #4 – Include Payments Due

Sometimes a business might have to pay for expenses, services, or purchases. And those types of payments usually find their way on P&L statements.

In some cases, however, a registered payment does not mean that the money is to leave right now. That money could leave the account only in the next month, for example.

Hence, you have to include projected payments in the cash flow forecast to further improve its accuracy.

The following are examples of payments due worth considering:

  • VAT taxes
  • Interest rates on loans
  • Utilities
  • PAYE taxes

Tip #5 – Compare with Current Cash Flow

One of the causes of inaccurate forecasting is unrealistic expectations.

It’s always important to check the forecast versus the current cash flow statement. Large discrepancies that no one can back up with facts may signal missing variables in the equation.

Tip #6 – Make Consistent Predictions

Doing a cash flow forecast once may not give you a degree of accuracy that small business owners hope to achieve.

One of the best ways to improve the accuracy of cash flow forecasts is to make it a habit. Updating your forecast as often as possible with new information can drastically improve its accuracy.

Furthermore, forecasting over long periods of time helps uncover certain trends. Again, it’s all data that can help improve future predictions.

Tip #7 – Account for Variable Costs

VAT taxes and interest rates are unlikely to change from month to month. But other costs may change depending on the weather, season, and other exterior factors.

So when calculating costs, it’s critical to allow some wiggle room for the variable costs. Those are costs that may vary from month to month – utility costs, for one, and perhaps the phone bill.

Accuracy Comes from Good Data

It’s nearly impossible to create a realistic forecast without using all the right information. This is especially true when many things can happen in the future that will be out of your control. However, using as much data as possible can only lead to more accurate forecasts. So keep collecting the right data and use it well.

7 Most Common Money Mistakes for Start-ups to Avoid

Posted on | by Jessica Weston | Leave a Comment on 7 Most Common Money Mistakes for Start-ups to Avoid

Smart financial management is essential for any business, no matter how big or small. However, it can be difficult to get things right, especially during the start-up stage. Poor financial planning is one of the most common reasons that start-ups fail, so the sooner you take ownership of your business’ financial health, the better. Dealing with your finances head-on from the get-go is the best way to set yourself up for lasting success. Careful planning can help you to avoid common money mistakes and shows potential investors that you’re serious. Here are the most common financial mistakes that start-ups make and how to avoid them.

1. Prioritising Instinct over Information

Whilst following your gut is generally a good principle, it’s a dangerous game to make assumptions about your finances. It’s vital that you meticulously track your revenue and expenses and closely monitor your cash flow. If a small mistake goes unnoticed for too long, it could prove very damaging for your business. During the start-up stage, using an Excel spreadsheet will suffice but be prepared to upgrade to bookkeeping software later on.

2. DIY Accounting

Managing your accounts by yourself will suffice for the initial setup of your business, but it’s wise to hire a professional accountant as early as possible. Juggling self-taught accounting with running a small business will eventually result in a backlog of errors, which can prove costly. Professional accounting services save time, money and stress, allowing you to focus on growth. You don’t need to hire a whole team. Start by outsourcing your taxes or setting up quarterly meetings with a financial consultant for help and advice.

3. Failing to Assign Project Budgets

Assigning a budget to a project prevents it from draining your finances should something go wrong. A clear budget will allow you to reassess your finances should the project require more money and make smart decisions that won’t damage your business.

4. Disorganized Files

The importance of balancing bank statements and keeping receipts in order cannot be overstated. Patchy bookkeeping can cause chaos for your business and result in a lot of trouble, not to mention wasted man hours trying to resolve the problem. Keeping all of your receipts and cross-referencing your accounts with your bank statements is vital for transparency and future success.

5.  Misunderstanding Your Target Market

In order for your business to be successful, you need to understand what your customers need. Knowing your target market helps you to reach them, as well as how to appropriately price your products and services. Here are some questions to consider:

What is your market position?

What need do you fulfil for your customers?

How much value do your products or services provide?

Who is your competition – and what makes you stand out?

Miscalculating prices can prove to be a grave error for a small business, but knowing your market well will help you to figure things out.

6.  Hiring Quantity over Quality

Over-hiring is an expensive mistake to make. Hiring employees is one of the most costly parts of running a business, so going overboard is a huge waste of money. It can also damage staff morale and productivity, and lay-offs further down the line will only amplify the problem.

Bad hires are another threat to a small business. Hiring the wrong employee can create an imbalance within the company culture. In turn, this can negatively impact other staff and even damage your business’ reputation. Don’t rush the hiring process. Taking extra care to avoid mistakes can save a lot of trouble in the long run.

7. Miscalculating Expenses

In order to keep your business afloat, you need to know exactly how much cash your business burns each month. Keeping a meticulous record of your expenses allows you to understand where your money is going, and how much you’ll need to survive. Underestimating your cash burn can land your business in hot water, so create a projection of your monthly expenditure and be sure to monitor it closely, making adjustments whenever necessary.

A successful business needs a strong financial foundation, so keep these mistakes in mind. No business is invincible and it really does pay to be cautious and always stay one step ahead.

If you want help to ensure that your new business gets off to the best possible start click the link below to arrange your free discovery call.

www.sunnysideaccountancy.co.uk/contact/

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