Category: Cashflow

The Fear of Money and Four Ways to Overcome Your Money Blocks

Posted on | by Jessica Weston | Leave a Comment on The Fear of Money and Four Ways to Overcome Your Money Blocks

Few people are wizards at making money. But it IS possible for anybody to get rid of their money blocks.

Businesses exist to make money. But even with that goal in mind, it doesn’t mean it’s an easy ride to the top.

Money blocks are all too real and common in personal and business finance. Learning to overcome them is an essential thing to do early on.

Here are four ways to help you overcome your own fear of money.

1. Acknowledge the Fear

As is the case with any fear, the first step to overcoming fear of money is to recognise it. Do that and it becomes easier to identify what’s actually scary.

Do you fear the thought of losing money? Or do you fear not making enough money?

Acknowledging your fear, whatever it may be, helps identify the real underlying issue. 

2. Ask for Help

Whether it’s personal or business finances, there’s always someone out there that knows more. 

People who hit money blocks and develop a fear of money are those that never ask for help. But there’s no shame in asking someone more qualified about what you can do in this regard.

Accountants, financial advisors, successful investors and entrepreneurs are all people that may be able to help. Salespeople and professional marketers can also provide insights into specific money problems.

3. Ask for Money

Are you not generating enough revenue? If so, why not consider asking for money? 

Do your due diligence on potential partnerships, investments, and loans.

In some cases, overcoming a money block simply requires an influx of capital from outside sources. It may not seem like the most appealing idea, but it is an option.

4. Develop New Money Habits

Sometimes, the best way to overcome a block is to step outside the comfort zone. 

People run into money blocks because they are fixed in their ways. That’s why making adjustments and developing new money habits can help overcome the fear of money.

It will take work and time. But you already know that one’s mindset can’t be changed in an instant. 

The idea is to try new things and make progress. After all, small successes add up and can alter the mindset.

Taking Action

The fear of money and money blocks don’t always cast a veil on what needs to change. It’s possible to identify solutions and still not overcome fear.

Why?

It’s because the fear of failure can also creep in. When that happens, people refuse to take action and make the required positive changes.

Tackling the fear head-on is always a good thing. Identify what action you should take and pull the trigger to break through the money block.

Learn to Overcome Common Money Myths

There are well-founded fears in the world. But when it comes to entrepreneurs and business owners, the line between facts and myths involving money is not all that clear sometimes. 

It’s vital to learn more about the economic environment as those without knowledge of this area can fall prey to money myths. 

They can end up creating entirely fictional and impossible scenarios for why they have money blocks. That’s also a reason why it’s difficult to see the solution when the issue doesn’t have a strong foundation to stand on.

Do you want to move past your money blocks? Book a call with us today www.sunnysideaccountancy.co.uk/contact

5 Ways to Grow Your Small Business Without Breaking the Bank

Posted on | by Jessica Weston | Leave a Comment on 5 Ways to Grow Your Small Business Without Breaking the Bank

Small business growth often requires hefty investment, but there are ways of growing and improving your enterprise without spending a huge chunk of cash. If you’re trying to build your business on a conservative budget, take a look at the following seven wallet-friendly ways to grow your small business. 

1. Analyse Your Marketing Efforts 

Fine-tuning your marketing efforts can help you use your marketing budget more wisely and achieve a better return on investment. Take a look at the marketing strategies you’re putting the most money into and work out which ones are driving sales. Tools like Google Analytics can help you figure out where your website traffic is coming from, allowing you to prune the practices that aren’t serving your business and focus on the ones that are achieving real results. Social media tools like HootSuite can also give you a clearer picture of the type of content that engages your audience the most. 

2. Fine-Tune Your Website

Many business owners build a website and then consider it a job done. However, your website should be regularly reviewed, optimised and updated to make sure that it’s delivering the best possible results for your business. 

Make sure that your contact information is correct and visible on each page. Strive to improve your loading times – for example, by compressing images – to boost your SEO score. Focus on local SEO strategies to find new customers in your local area and make sure that your site is content rich to attract a bigger audience. 

3. Take Advantage of Trends 

Show your customers that you’re an agile organisation by creating content, products and offers that reflect what is happening in your community and industry. For example, in recent years there has been a rise in micro influencer marketing and a focus on shopping locally due to the covid-19 pandemic. You could capitalise on this by collaborating with micro influencers in your local area, proving that you’re an on-trend business at the heart of the local community. 

4. Upgrade Your Sales Funnel with Content Marketing

If you generate a lot of leads but relatively few sales, then something is going wrong somewhere in your sales funnel. Either you’re not filling the top of the funnel with the right kind of leads, or you’re not nurturing them appropriately to convert them into paying customers. 

One key way to convert leads who are not yet ready to buy into paying customers is nurturing them through content marketing. A first-time visitor to your site will rarely make a purchase, so you need to give them a good reason to keep on coming back. When you share content to your audience every single day, you remain front of mind and build trust. Then, when a prospect becomes ready to buy, voila – you’re right in front of them. 

5. Understand Your Finances 

Knowledge, as they say, is power. Gaining a deeper understanding of your small business’ finances will empower you to make better decisions and grow your business more effectively. Using cloud accounting software such as Xero or Quickbooks can be enormously helpful here, as these programs create easy-to-understand reports and summaries. If you work with an accountant, be sure to consult with them regularly and don’t be afraid to ask questions – a great accountant is not just a number cruncher, but a partner and guide.

Summary 

Growing your business does not need to break the bank. Often, accelerating small business growth is a case of fine-tuning practices that are already in place and capitalising on the opportunities that are already in front of you. By working to improve your existing website and sales funnel, you can generate more high quality leads and nurture them to become paying customers via content marketing. It’s also important to remain agile and respond to local and market trends. Finally, it’s essential that you understand your finances so that you can make smart financial decisions that will really benefit your business growth. 

The Four Cash Flow Forecasting Blunders That Lead to an Inaccurate Financial Picture

Posted on | by Jessica Weston | Leave a Comment on The Four Cash Flow Forecasting Blunders That Lead to an Inaccurate Financial Picture

Cash flow forecasting is a powerful tool for businesses of all sizes. To make it all the more effective, avoiding these common mistakes is crucial.

Making projections can be incredibly beneficial for controlling the financial situation in a business. Because of this, financial reports are the most important aspect of company accounting. 

The forecast serves as a foundation for future strategies and plans. Unfortunately, there are some mistakes commonly made in the process. 

If a cash flow forecast isn’t done properly and fails to illustrate crucial financial trends, it can prove quite damaging to a business. 

In this article, we’ll examine some of the pitfalls of improper cash flow forecasting that are most likely to put a company in turmoil.

Mistake #1. Incremental Income Line

Since cash flow forecasting depends on the income from business operations, projections of the incoming cash must be handled with care. And a common mistake when it comes to this aspect is making the income line incremental. 

For example, setting growth goals from one percentage to a higher one isn’t enough. A correctly done income projection should rely on such contributors as prices and volume while considering different divisions. 

In this way, the forecast will better reflect business performance and simultaneously raise attention about potential issues. 

Mistake #2. Inaccurate Data

Cash flow forecasting can’t be effective if it provides outdated data. Yet, many businesses fail to update their projections regularly. 

If there’s a large discrepancy between the actual numbers and those entered in the forecast, issues could amass.

Updates to the cash flow forecast should ideally be done weekly. When the projection is updated that often, it might not be a perfect forecast but it will vary only slightly.

Mistake #3. Not Calculating Differences

Difference calculations can provide valuable insight and prove quite useful for devising a business plan. For that reason, a well-made cash flow forecast should include those calculations. 

It’s even more efficient if they are expressed as percentages, as these will make certain expenses impossible to overlook and present a clearer picture than just considering numbers.

Mistake #4. Sticking to One Scenario

It’s always advisable to consider various ways certain business aspects can develop in the forecast period. 

For example, if sales projections are overestimated, the whole projection will quickly prove unreliable. That’s why it’s vital to consider different scenarios when creating a cash flow forecast, with a particular focus on the worst-case scenario.

Many businesses avoid considering such cases, but those should always be predicted before moving forward. A realistic approach to the projection is ideal and it should be a product of considering both extremes – worst-case and best-case scenarios.

Create the Most Accurate Cash Flow Forecast

Meticulously working on the cash flow forecast will serve as an excellent platform for future business planning. Taking the relevant data into consideration and making the forecast straightforward and understandable is crucial for every company.

Although a forecast will rarely predict with absolute accuracy, it has the power to lead the company in the best possible direction.

Top Seven Tips for Accurate Cash Flow Forecasting

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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.

The Most Dangerous Accounting Mistakes For Your Small Business

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Starting your own business is an amazing thing to do but it’s also notoriously risky. There’s a lot to think about when you first start out on your own and it can be tempting to put accounting on the back burner, but that would be a huge mistake. Good accounting is crucial to the financial health of your business and mistakes can be devastating, especially in the early days. It’s important to know which mistakes to avoid to ensure that your small business is around for years to come.

1. Bad Bookkeeping

New business owners are often overwhelmed and tend to neglect bookkeeping. However, it’s essential that you keep the books up to date and record all of your earnings and expenses. Without this data, you won’t have a clear picture of how you’re faring financially, which can lead to a myriad of nasty problems.

Meticulous bookkeeping allows you to spot trends, understand your spending and examine which practices generate the largest ROI. You can then leverage this data to improve the financial health of your business, maximise your profits and manage your cash flow. Staying on top of the books allows you to stay one step ahead and put out fires before they start.

2. Confusing Cash Flow and Income

The money you take isn’t the money you make.

£100,000 in revenue sounds great, but if you had to spend £30,000 on equipment, insurance and employees to make that money, you’re actually left with £70,000 profit. You’ll then have to pay tax on your gross profit, so the net amount will be smaller again.

It’s vital to know not only how much money is coming into your business, but how much is going out. Getting carried away with gross numbers is a common mistake that new business owners make, and it quickly lands them in hot water. It’s important to stay grounded in reality and know how much you’re really making so that you don’t overspend.

3. Using Outdated Practices

You’re a 21st century business and your accounting practices should reflect that. Online accounting and bookkeeping softwares are faster, easier and dramatically more efficient than ledgers and Excel spreadsheets.

Online accounting software is easy to learn and significantly reduces the margin of human error by automating processes and calculations for you. This means that you’re much less likely to make mistakes on your tax return. It also reduces the risk of making the wrong financial decisions due to inaccurate information.

With this type of software, you won’t have to spend hours updating and organising your financial information. Another benefit is that it allows you to locate and cross-reference information quickly and easily, without having to spend hours searching for the right files. It may be more expensive than the DIY approach initially, but using online software will save you many man hours.

4. DIY Accounting

Accounting is complicated; there’s a reason it takes accountants years to fully qualify. Trying to manage your accounts all by yourself is a surefire way to waste time and stress yourself out. Besides, without extensive financial knowledge it’s unlikely that you’ll be able to save a significant amount of money on your tax return. Furthermore, you’ll be heavily penalised for making even a minor mistake on your return which could cause financial problems for your business.

Trying to manage on your own is a drain on your resources so the sooner you seek professional help, the better. Investing in the services of an accountant is one of the best decisions you can make regarding the financial health of your small business.

Summary

It’s important to avoid the above accounting mistakes in order to set your business up for success. Neglecting or mismanaging your accounts can have serious consequences, so it’s best not to take any risks. Whilst it’s tempting to put accounting off until later, you need to make it a priority right from the very start. Good businesses and bad accounting just don’t go together.

Quick Ways to Improve Your Financial Performance

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If you want to improve the financial aspect of your business, start with smart changes that will bring you great results.

Even when a business is doing well, there’s always room for improvement. Especially if you want your company to make more money or have better cash flow.

Here are three quick ways to improve financial performance that apply to every company, big and small.

Rearrange Expenses

Some business owners start with the idea that their business needs to make more money to cover all expenses. But what if you reverse the order and see if you can reduce your expenses?

Perform an evaluation of your expenses and see if there are areas where your business is spending more than necessary. A couple of rearrangements could make a sizeable difference.

For example, you may want to negotiate with your suppliers to get a better deal. You could also switch your insurance company if another company offers the same level of coverage at a more reasonable price.

Finally, you could discuss a periodic payment plan for larger expenses to make it easier on your company’s finances.

Offer More Payment Methods

If you’re working directly with customers, you may offer additional payment options. Doing so may let you attract many more customers at the cost of a little work.

Everyone has a preferred payment method and if you don’t have that option available, they may move on or are at least less likely to buy repeatedly.

If you don’t have a webshop, you could upgrade your site to include one and have multiple payment methods available for customers. Besides credit and debit cards, some of the popular ones you can offer include PayPal, Skrill, Google Pay, etc.

Businesses that have broadened their accepted payment methods have mostly experienced an increase in sales and customer satisfaction.

Change Your Marketing Strategy

Many businesses are spending a lot of money on marketing. Having a marketing budget is fine, but if you’re not doing great, consider downsizing or trying something else.

Social networks and blogs are very powerful tools for building an audience that trusts you. It’s also a cheaper and faster channel to get your message across. Try it and you may realise that you could cut your marketing budget in half.

You don’t have to pay for ads, either. Instead, you only spend time creating content and engaging with the audience.

Building an organic presence on social media won’t happen overnight. But if you know what you’re doing or have someone on your staff that does, a month of constant work may be enough to get your foot in the door.

Smart Changes

If you want to improve your company’s financial performance, you don’t have to do anything drastic. Small and smart changes can already lead you to where you want to be.

Every business can rearrange its expenses, offer more payment options, and get the most out of social media.

Try using these strategies for a few months and you may be pleasantly surprised by the results.

Need a hand improving your financial performance? Get in touch today! www.sunnysideaccountancy.co.uk/contact/

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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10 QUICK TIPS TO IMPROVE YOUR CASHFLOW

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  1. Send invoices straight away.

The quicker you send your invoice, the faster you’ll get paid and you won’t get paid at all if you forget to send them.

  • Ensure that your customers pay your invoices on time.

This can be made easier by using direct debits, automatic invoice reminders, early payment incentives such as discounts, or late payment fees.

  • Increase your prices.

Are you charging enough for your products or services? If your prices are too low then you will be selling yourself short.

  • Consider new ways to appeal to more customers.

This could be by adding more products or services, putting items together to encourage customers to buy more or just updating your marketing strategy. Another great way to expand is to reward your loyal customers so that they are more likely to spread the word about you.

  • Take a look at your operating expenses.

Are there any you could cut out? Is there a cheaper alternative? We would recommend that you do a bank account audit every few months so that you’re only paying for what you need to.

  • If you use equipment is there a more efficient version you could buy?

Although this would cost more in the first place, in the long run it would save time and cut wage costs allowing you to produce more products. If purchasing equipment isn’t an option right now you consider leasing.

  • Be strategic about when you pay your suppliers.

If the supplier offers a discount for early payment then ensure that you pay early to save some money. If they don’t then pay at a time that suits your business best.

  • Open up a high interest savings account.

Put any spare money into here instead of leaving it sitting in your bank account not earning you any money.

  • Do credit checks on your customers before you sign them up.

If the customer has a poor credit rating then it’s very unlikely that you’ll receive payment on time.

  1. Make use of accounting products.

Cashflow is a much easier thing to keep on top of if you can see the situation in real time.